Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-05974/USCOURTS-cand-3_18-cv-05974-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-Other Contract

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

AGATON T. GUALBERTO, et al.,

Plaintiffs,

v.

WELLS FARGO BANK, N.A., et al.,

Defendants.

Case No. 18-cv-05974-EMC 

ORDER GRANTING DEFENDANTS’

MOTION TO DISMISS

Docket No. 4

I. BACKGROUND

Plaintiffs are Virginia Gualberto and the 2017 Agaton & Virginia Gualberto Family Trust 

(“Plaintiffs”). Defendants are Wells Fargo, N.A. and the Bank of New York Mellon 

(“Defendants”). “On May 8, 2007, Plaintiff Virginia Gualberto executed a Deed of Trust and 

Adjustable Rate Note ‘Pick- A-Payment Loan.’” First Amended Complaint (“FAC”) ¶ 6. Golden 

West Savings Association Service Company was the original trustee, and World Savings Bank 

FSB was the original lender and loan servicer for Plaintiffs’ loan. Id. ¶ 7. Wachovia Bank 

purchased Golden West Financial and its subsidiary World Savings. Id. ¶ 8. Wachovia Mortgage 

took over as servicer of Plaintiffs’ loan. Id. In 2008, Defendant Wells Fargo purchased Wachovia 

and became the servicer of Plaintiffs’ loan. Id. ¶ 9. Defendant Wells Fargo claims to be the 

beneficiary and owner of the loan. Id. ¶ 65; Motion to Dismiss (“Mot.”) at 11. On April 19, 

2018, Defendant Wells Fargo, as the alleged beneficiary, filed a Substitution of Trustee and on the 

same day filed a Notice of Default on Plaintiffs’ property. FAC ¶ 22. “[O]n July 30, 2018, a 

Notice of [T]rustee’s sale was recorded.” Id. “On August 23, 2018, Plaintiffs’ property was sold 

at a trustee’s sale.” Id. ¶ 24. 

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However, Plaintiffs allege that this sale must be unwound because World Savings Bank 

sold Plaintiffs’ mortgage loan to the WSR 30 Trust before the closing date of the trust on August 

28, 2007. Id. ¶ 10. Thus, when Defendant Wells Fargo purchased Wachovia (previously World 

Savings Bank), Defendant Wells Fargo did not acquire Plaintiffs’ mortgage loan; the loan had 

already been sold to the trust. For this reason, Plaintiffs contend that Wells Fargo did not have 

legal authority to foreclose on their home. The FAC requests the Court unwind the foreclosure 

sale, cancel the instruments, and order Defendant Wells Fargo to return loan payments to Plaintiffs 

as they were unjustly enriched by accepting the payments. See generally FAC Counts I-II; IV-V. 

Plaintiffs appear to base their claim that the mortgage was sold to the WSR 30 Trust on the fact 

that “Wachovia securitized substantially all of its residential mortgage loans,” id. at 10, and their 

loan was consistent with the types of loans sold to the WSR 30 Trust. Id. ¶ 12. 

Plaintiffs, however, present no direct documentary proof of sale of their mortgage to the 

trust or sufficient allegations for the Court to plausibly believe that Wells Fargo does not own the 

loan.

1

 

II. DISCUSSION

A. Request for Judicial Notice 

Defendants request the Court judicially notice the following items: 

• Exhibit A: Deed of Trust recorded on May 16, 2007 in the San Mateo County Recorder’s 

Office as document number 2007-075673 as to property located at 1460 Crystal Drive, 

Hillsborough, San Mateo County, California 94001-7310.

• Exhibit B: Substitution of Trustee recorded on April 5, 2017 in the San Mateo County 

Recorder’s Office as document number 2017-029641. 

• Exhibit C: Notice of Default recorded on April 5, 2017 in the in the San Mateo County 

 

1 Plaintiffs do not contend that any of the recorded documents named the WSR 30 Trust as having 

any interest in their loan. Defendant BNY Mellon is the trustee of the WSR 30 Trust, but 

Plaintiffs argue that Defendant BNY Mellon similarly has no claim to the loan because “it never 

received an effective assignment of Plaintiffs’ mortgage note” pursuant to California Civil Code § 

2934a. Id. ¶ 25. Plaintiffs assert that California Civil Code § 2934a “requires that all (valid) 

beneficiaries must execute and acknowledge a Substitution of Trustee”, which BNY Mellon did 

not do. Id. Evidently, under Plaintiffs’ theory, no one owns their mortgage; thus, implying their 

obligation under loan mortgage simply eviscerated.

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Recorder’s Office as document number 2017-029642. 

• Exhibit D: Notice of Trustee’s Sale recorded on July 18, 2017 in the San Mateo County 

Recorder’s Office as document number 2017-061101, setting a Trustee’s Sale date for 

August 16, 2017. 

• Exhibit E: Notice of Rescission of Notice of Default recorded on December 1, 2017 in the 

San Mateo County Recorder’s Office as document number 2017-107477.

All these items are part of the public record and are therefore appropriate to be judicially 

noticed, as their authenticity is not questioned. See Miller-Swift v. Mortg. Elec. Registration Sys., 

Inc., No. 17-CV-03408-VC, 2017 WL 6759380, at *1 (N.D. Cal. Oct. 16, 2017) (“Each document 

was recorded in the Alameda County Recorder's Office and is therefore part of the public 

record.”); see also Fed. R. Evid. 201; Mack v. South Bay Beer Distribs., Inc., 798 F.2d 1279, 

1282 (9th Cir. 1986). Thus, the Court judicially notices all of these publicly recorded documents. 

B. Legal Standard

The Federal Rules of Civil Procedure require a short and plain statement of the claim 

showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8. A complaint must state more than 

“‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 

678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). To survive a 12(b)(6) 

motion to dismiss, a plaintiff must assert “enough facts to state a claim to relief that is plausible on 

its face.” Twombly, 550 U.S. at 547. “A claim has facial plausibility when the plaintiff pleads 

factual content that allows the court to draw the reasonable inference that the defendant is liable 

for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). While 

“allegations of material fact are taken as true and construed in the light most favorable to 

Plaintiffs”, “conclusory allegations of law and unwarranted inferences are insufficient to defeat a 

motion to dismiss for failure to state a claim.” Epstein v. Washington Energy Co., 83 F.3d 1136, 

1140 (9th Cir. 1996). 

C. HOLA Preemption

Plaintiffs’ claim is that Defendants never had title to their loan because World Savings 

Bank sold it to the WSR 30 Trust prior to World Savings Bank’s sale to Wachovia and subsequent 

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sale to Wells Fargo. Defendants contend that these claims, which ultimately are predicated on a 

defective chain of title, are preempted by the Home Owners’ Loan Act of 1933 (“HOLA”). 

HOLA was enacted to provide relief for those with home mortgage debts during the Great 

Depression of the 1930’s. See Campidoglio LLC v. Wells Fargo & Co., 870 F.3d 963, 971 (9th 

Cir. 2017). “HOLA empowered the regulatory body, which became the [Office of Thrift 

Supervision (“OTS”)], to authorize the creation of federal savings and loan associations, to 

regulate them, and, by its regulations, to preempt conflicting state law.” Silvas v. E*Trade Mortg. 

Corp., 514 F.3d 1001, 1005 (9th Cir. 2008). Congress, by way of HOLA, gave OTS “broad 

authority to issue regulations governing thrifts.” Id. (citing 12 U.S.C. § 1464). 

In order to provide thrift institutions for the deposit of funds and for 

the extension of credit for homes and other goods and services, the 

Comptroller of the Currency is authorized, under such regulations as 

the Comptroller of the Currency may prescribe--(1) to provide for 

the organization, incorporation, examination, operation, and 

regulation of associations to be known as Federal savings 

associations (including Federal savings banks), and (2) to issue 

charters therefor, giving primary consideration of the best practices 

of thrift institutions in the United States. The lending and investment 

powers conferred by this section are intended to encourage such 

institutions to provide credit for housing safely and soundly. 

12 U.S.C.A. § 1464 (West). In furtherance of their role “[a]s the principal regulator for 

federal savings associations, OTS promulgated a preemption regulation in 12 C.F.R. § 560.2.” 

Silvas, 514 F.3d at 1005.

Section 560.2(a) states that pursuant to HOLA, 

OTS is authorized to promulgate regulations that preempt state laws 

affecting the operations of federal savings associations when 

deemed appropriate to facilitate the safe and sound operation of 

federal savings associations, to enable federal savings associations 

to conduct their operations in accordance with the best practices of 

thrift institutions in the United States, or to further other purposes of 

the HOLA. To enhance safety and soundness and to enable federal 

savings associations to conduct their operations in accordance with 

best practices (by efficiently delivering low-cost credit to the public 

free from undue regulatory duplication and burden), OTS hereby 

occupies the entire field of lending regulation for federal savings 

associations.

12 C.F.R. § 560.2(a). Section 560.2(b) provides illustrative examples of “the types of state 

laws preempted by paragraph (a) of [section 560.2.]” 12 C.F.R. § 560.2(b). This includes 

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“without limitation, state laws purporting to impose requirements regarding: . . . (10) Processing, 

originating, servicing, sale or purchase of, or investment or participation in, mortgages[.]” Id. 

This Court has previously discussed HOLA preemption and recognized that “HOLA contains a 

broad field preemption clause.” Tamburri v. Suntrust Mortg., Inc., 875 F. Supp. 2d 1009, 1017 

(N.D. Cal. 2012) (Chen, J.). now

Section 560.2(c) sets out the “[s]tate laws that are not preempted.” 12 C.F.R. § 560.2(c). 

State laws of the type laid out in section 560.2(c) “are not preempted to the extent that they only 

incidentally affect the lending operations of Federal savings associations or are otherwise 

consistent with the purposes of paragraph (a) of this section[.]” Id. Section 560.2(c) lists the 

following as exempt from preemption: “(1) Contract and commercial law; (2) Real property law; 

(3) Homestead laws specified in 12 U.S.C. 1462 § a(f); (4) Tort law; (5) Criminal law; and (6) 

Any other law that OTS, upon review, finds: (i) Furthers a vital state interest; and (ii) Either has 

only an incidental effect on lending operations or is not otherwise contrary to the purposes 

expressed in paragraph (a) of this section.” Id. 

OTS also provided the framework for determining whether a state law is preempted under 

the OTS regulation. 

When analyzing the status of state laws under § 560.2, the first step 

will be to determine whether the type of law in question is listed in 

paragraph (b). If so, the analysis will end there; the law is 

preempted. If the law is not covered by paragraph (b), the next 

question is whether the law affects lending. If it does, then, in 

accordance with paragraph (a), the presumption arises that the law is 

preempted. This presumption can be reversed only if the law can 

clearly be shown to fit within the confines of paragraph (c). For 

these purposes, paragraph (c) is intended to be interpreted narrowly. 

Any doubt should be resolved in favor of preemption.

OTS, Final Rule, 61 Fed. Reg. 50951, 50966–67 (Sept. 30, 1996); see also Silvas, 514 F.3d at 

1005.

In conducting the above analysis, “the court does ‘not look merely to the abstract nature of 

the cause of action allegedly preempted but rather to the functional effect upon lending operations 

of maintaining the cause of action.’” Gens v. Wachovia Mortg. Corp., No. 10-CV-01073-LHK, 

2011 WL 9121, at *9 (N.D. Cal. Jan. 3, 2011), aff'd, 503 F. App'x 533 (9th Cir. 2013) (quoting 

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Naulty v. GreenPoint Mortg. Funding, Inc., Nos. C 09–1542, C 09–1545, 2009 WL 2870620, at 

*4 (N.D. Cal. 2009)). The Ninth Circuit has described HOLA as a “radical and comprehensive 

response to the inadequacies of the existing state system,” that is “so pervasive as to leave no 

room for state regulatory control.” Id. at 1004–05 (quoting Conference of Fed. Sav. & Loan 

Ass'ns v. Stein, 604 F.2d 1256, 1257, 1260 (9th Cir. 1979), aff'd, 445 U.S. 921).

Defendants assert that Plaintiffs’ claims “fall squarely within § 560.2(b)(10)’s specific 

preemption of state claims that deal with ‘investment’ in mortgages.” Mot. at 9 (citing Terrazas v. 

Wells Fargo Bank, N.A., No. 13–cv–00133–BEN–MDD, 2013 WL 5774120 (S.D. Cal. Oct. 24, 

2013). 

Plaintiffs argue that their causes of action are not preempted by HOLA because: (1) the 

National Banking Act does not preempt their causes of action; thus, HOLA similarly does not 

preempt this cause of action; (2) Dodd-Frank Wall Street Reform and Consumer Protection Act, 

12 U.S.C. §§5301-5641 changed HOLA preemption in significant ways (including that HOLA no 

longer occupies field preemption); and (3) HOLA does not preempt Plaintiffs’ claims because this 

cause of action does not involve lending but is actually about foreclosure. Opp. at 12–16. 

Plaintiffs do not challenge whether HOLA applies generally to Defendants or the Deed of 

Trust securing their loan from World Savings Bank, they only challenge the application of HOLA 

preemption as it relates to Plaintiffs’ causes of action.

1. HOLA Application to Defendants

At the hearing on this matter Plaintiffs’ counsel confirmed that Plaintiffs do not challenge

the application of HOLA preemption to Wells Fargo as a non-savings bank. See McShannock v. 

JP Morgan Chase Bank N.A., No. 18-CV-01873-EMC, 2018 WL 6439128, at *8 (N.D. Cal. Dec. 

7, 2018) (“HOLA preemption [applies] only to conduct occurring before the loan changed hands 

from the federal savings association or bank to the entity not governed by HOLA.”) (Quoting 

Rijhwani v. Wells Fargo Home Mortg., Inc., No. C 13-05881 LB, 2014 WL 890016, at *7 (N.D. 

Cal. Mar. 3, 2014).

In this case, Plaintiffs’ FAC alleges that World Savings Bank sold its interest in their loan 

to the WSR 30 Trust before transferring its assets to Wachovia and then to Wells Fargo. FAC ¶ 

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25. Therefore, the actions at issue here are based on the actions of World Savings Bank, a savings 

bank. See Terrazas, 2013 WL 5774120, at *5 (finding that Plaintiffs’ claims were preempted by 

HOLA because “Plaintiffs’ claims . . . relate to the actions of the originator of the loan and its 

successor entities in ‘servicing’ the mortgage.”). 

Thus, Defendants are entitled HOLA preemption even though Wells Fargo is a successor 

to World Savings Bank and not itself a savings bank. 

2. HOLA Application to Plaintiffs’ Causes of Action 

Defendants assert that HOLA preempts all of Plaintiffs’ claims. Mot. at 8–10. Defendants 

rely on the proposition that “all of Plaintiffs’ claims are preempted because they are based on their

challenge to Defendants’ right to foreclose. This falls squarely within § 560.2(b)(10)’s specific

preemption of state claims that deal with ‘investment’ in mortgages.” Mot. at 9 (citing Terrazas, 

2013 WL 5774120). Section 560.2(b)(10) states: “the types of state laws preempted by paragraph 

(a) of this section include, without limitation, state laws purporting to impose requirements 

regarding: . . . (10) Processing, originating, servicing, sale or purchase of, or investment or 

participation in, mortgages.” 12 C.F.R. 560.2(b). 

a. HOLA Application and the Dodd-Frank Act 

Plaintiffs argue that HOLA’s field preemption no longer applies following the Dodd-Frank 

Act. Opp. at 13–14. However, as this Court has recently explained in McShannock v. JP Morgan 

Chase Bank, Dodd-Frank’s changes to HOLA preemption apply “to any contract entered into or 

before July 21, 2010, by national banks, Federal savings associations.” McShannock, 2018 WL 

6439128, at *7 n. 3 (quoting 12 U.S.C. § 5553). Thus, Dodd-Frank “on its face preserves the 

application of the original HOLA preemption scheme established by OTS at 12 C.F.R. § 560.2 to 

contracts.” Id. In this case, the FAC states that the Deed of Trust was executed on May 8, 2007, 

before the Dodd-Frank Act was enacted (July 21, 2010). FAC ¶ 6. For this reason, the changes to 

preemption arising from the Dodd-Frank Act do not apply to Plaintiffs’ causes of action. Thus, 

HOLA field preemption still applies. 

b. HOLA and NBA

Plaintiffs contend that because the National Banking Act is rooted in conflict preemption,

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not field preemption, HOLA similarly cannot occupy field preemption. However, as this Court 

has noted, “HOLA’s strict field preemption analysis . . . bears little relation to the NBA’s more 

flexible conflict preemption analysis.” Tamburri, 875 F. Supp. 2d at 1018. Therefore, the NBA’s 

conflict preemption has no bearing on HOLA’s field preemption. HOLA’s field preemption 

stands on its own.

c. HOLA Preemption and the Claims Presented in the FAC

Finally, Plaintiffs challenge HOLA preemption relying on the assertion that the claims at 

issue here are more akin to the section 560.2(c) HOLA preemption exemption for real property 

law, than the section 560.2(b)(10) express preemption of state laws regulating loan servicing, 

purchasing, or investing. However, the challenge here does not concern servicing of the loan. 

Instead, Plaintiffs challenge the foreclosure of their property based on a lack of title to the property

following a series of loan purchases. They allege that Wells Fargo never had proper title to the 

property because the originating savings bank sold the loan prior to Wells Fargo’s purchase of the 

loan. 

Numerous courts have addressed similar claims and found that HOLA preemption applies. 

In Terrezas v. Wells Fargo Bank, plaintiffs made allegations like those presented here. They 

alleged, their loan originator World Savings Bank executed a note for a Deed of Trust, and then

World Savings Bank allegedly sold and transferred the note to an unknown beneficiary. Terrazas, 

2013 WL 5774120, at *1. The court in Terrezas found that despite plaintiffs raising nine separate 

causes of action, including claims for cancellation of instruments and a request to set aside a 

trustee’s sale, their claims were not real property issues as contemplated in § 560.2(c)’s exceptions 

to preemption, but rather “their claims [were] all founded upon the allegation that Wells Fargo 

[was] not the true owner of the Note or Deed of Trust, and therefore had no authority to either 

service the loan or to foreclose upon the Plaintiffs’ home.” Id. at *5. The court found that 

“Plaintiffs’ claims therefore relate to the actions of the originator of the loan and its successor 

entities in ‘servicing’ the mortgage. As such, Plaintiffs’ state law claims fall squarely within the 

scope of § 560.2(b)(10), which covers ‘Processing, origination, servicing, sale or purchase of, or 

investment or participation in, mortgages.’” Id. at *5.

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This Court has addressed a similar issue where the crux of the complaint was “essentially 

that Defendants wrongfully foreclosed” on plaintiff’s home and “Defendants did not have 

authority to foreclose” in part because MERS had “sold the Deed of Trust over and over[,] and the 

true beneficiary is unknown and has separated the Note and Deed of Trust making the deed of 

trust null and void.” Castillo, 2012 WL 1213296, at *5. In that case, this Court recognized that 

“claims, based on Defendants’ alleged failure to follow proper procedures in maintaining and 

servicing a loan and failure to demonstrate their authority to foreclose, have consistently been 

determined to fall under the umbrella of claims preempted by HOLA.” Id.; see also Winding v. 

Cal–W. Reconveyance Corp., CV F 10–0041 LJO GSA, 2011 WL 221321, at *12 (E.D. Cal. Jan. 

24, 2011) (“Wells Fargo characterizes the ‘heart’ of the complaint’s claims as ‘negotiable 

instrument’ transfer and ownership and that allegations to such effect fall within section 560.2(b) 

(10) as a challenge to a ‘sale or purchase of a ‘mortgage’ originated by a saving bank. Wells 

Fargo is correct that section 560.2 preempts the complaint’s allegations as to misconduct 

surrounding foreclosure originating from negotiable instrument issues. HOLA preemption further 

warrants dismissal of the complaint's claims given that they address ‘sale or purchase of . . . or 

participation in, mortgages.’”); Hague v. Wells Fargo Bank, N.A., C11–02366 TEH, 2011 WL 

6055759, at *4 (N.D. Cal. Dec. 6, 2011) (“[C]laims arising from the transfer of negotiable 

instruments fall into the ‘sale or purchase’ provision of section 560.2, making claims of 

misconduct arising from the transfer of such instruments in a foreclosure proceeding preempted by 

HOLA.”)); Lindberg v. Wells Fargo Bank N.A., No. CV C 13-0808 PJH, 2013 WL 3457078, at *3 

(N.D. Cal. July 9, 2013) (holding that despite “plaintiff [alleging] that Wells Fargo lacks standing 

to foreclose, because it is not in possession of the original note, because the chain of title to the 

subject property has been broken, and because plaintiff’s loan has been securitized, which 

extinguishes Wells Fargo’s interest in the subject property”, “HOLA preemption provides an 

independent basis for dismissing these ‘standing to foreclose’ claims.”); Thomas v. Deutsche Bank 

Nat. Tr., No. C 12-00472 CRB, 2012 WL 1600434, at *3 (N.D. Cal. May 7, 2012) (where 

“Plaintiff’s main argument is that the loan was securitized into a REMIC trust, and that this action 

divested the lender of interest in the Note, and has tainted all the foreclosure procedures”, the court 

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held “that HOLA preempts all of Plaintiff's state law claims that are based upon the underlying 

alleged securitization of the loan, and the issues stemming from it.”). 

As noted, in this case, the claims at bar similarly concern chain of title: whether Defendant 

Wells Fargo owns the mortgage loan or whether World Savings Bank sold the loan to the WSR 30 

Trust prior to transfer to Wells Fargo. It is thus likewise preempted by section 560.2(b)(10), as the 

claims in this matter deal with the “[p]rocessing, origination, servicing, sale or purchase of, or 

investment or participation in, mortgages.” 12 C.F.R. § 560.2(b)(10). 

Plaintiffs cite two cases to support their contention that HOLA does not preempt their 

claims. First, Plaintiffs cite to Mabry v. Superior Court, 185 Cal. App. 4th 208 (2010) for the 

proposition that the process of foreclosure it not preempted by HOLA. However, Mabry involved 

a different issue, as that case dealt with the process of foreclosure, not the sale of a loan affecting 

the ownership of the mortgage loan and thus the ability foreclose. See Mabry, 185 Cal. App. 4th 

at 217 (“We agree with the Mabrys that the process of foreclosure has traditionally been a matter 

of state real property law.” (Emphasis in original)). The court in that case dealt with the specific 

issue of whether Civil Code section 2923.5 was preempted by HOLA. Id. at 228–31. Section 

2923.5 deals with Notice of Default. Plaintiffs do not contend that Wells Fargo failed to follow a 

procedure in the foreclosure process. Plaintiffs’ claims instead arise from the question of whether 

World Savings Bank sold Plaintiffs’ mortgage loan to the WSR 30 trust and whether Wells Fargo 

ever actually purchased the mortgage loan. Thus, Mabry is inapposite. 

Plaintiffs also cite to Cheung v. Wells Fargo Bank, N.A to support their contention that 

their claims are not preempted by HOLA. Cheung involved allegations similar to those presented 

here: 

Plaintiffs base this suit on the assertion that Wells Fargo never 

became the beneficiary of their mortgage with World Savings Bank 

and thus lacked authority to foreclose plaintiffs' property. Plaintiffs 

allege that World Savings Bank extinguished its interest in the loan 

through a failed attempt to sell and securitize it into a mortgagebacked security trust held by the Bank of New York as trustee. 

According to the plaintiffs, this sale and securitization did not close 

by the deadline in the securitization agreement and therefore the 

mortgage was never transferred to the trust. Plaintiffs argue the 

result of this failed sale and securitization is that the mortgage 

neither remained with World Savings Bank nor transferred to the 

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Bank of New York, but instead became the property of an unknown 

beneficiary. Plaintiffs then conclude that because World Savings 

Bank lost its interest in the loan, Wells Fargo did not obtain the 

mortgage when it succeeded World Savings Bank. Similarly, 

plaintiffs assert Bank of New York, the trustee to whom World 

Savings Bank intended to transfer the mortgage, never acquired any 

interest in the loan and likewise had no interest to transfer to Wells 

Fargo.

Cheung, 987 F. Supp. 2d 972, 975 (2013). In that case, defendant argued that “any claim under 

state law, including any claims relating to the foreclosure process, are preempted,” and the court 

there found that “there is simply no basis to find that HOLA precludes claims based on the alleged 

failures to conduct non judicial foreclosures in conformance with the requirements of California 

law.” Id. at 979 (emphasis in original). The court held that “[a] lender cannot on the one hand 

rely on California law as the foundation for its right to conduct a non judicial foreclosure, while on 

the other hand ignoring any restrictions on procedural requirements that are part of that process 

under California law.” Id. Here, Defendants are not alleged to have “ignor[ed] any restrictions on 

procedural requirements” of foreclosure. The crux of the alleged misconduct is not the actual 

foreclosure proceedings, but is instead on Defendants’ chain of title. 

Accordingly, preemption applies.

D. Failure to State a Claim

Defendants contend Plaintiffs failed to allege sufficient factual allegations that Defendant 

Wells Fargo did not have an interest in the Deed of Trust. Mot. at 10. Defendants contend that 

“Plaintiffs advance a misguided theory that the Loan is owned by BNY Mellon and not Wells 

Fargo, based wholly on their unsupported and thereby completely speculative, premise that their 

Loan ‘was sold to the [Series 30 Trust] on or before the Trust’s closing date.’” Mot. at 8 (quoting 

FAC ¶ 10) (alterations in original). Defendants argue that Plaintiffs’ claim that their loan was sold 

to the WSR 30 Trust is entirely speculative and not based on factual allegations. Mot. at 8. They 

argue that Plaintiffs fail to assert any “concrete facts.” Id. 

“In California, a ‘deed of trust containing a power of sale . . . conveys nominal title to 

property to an intermediary, the ‘trustee,’ who holds that title as security for repayment of [a] loan 

to [a] lender, or ‘beneficiary.’” Barrionuevo v. Chase Bank, N.A., 885 F. Supp. 2d 964, 972 (N.D. 

Cal. 2012) (Chen, J.) (quoting Kachlon v. Markowitz, 168 Cal. App. 4th 316, 334 (2008)) (marks 

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of omission in original). “Several courts have recognized the existence of a valid cause of action 

for wrongful foreclosure where a party alleged not to be the true beneficiary instructs a trustee to 

file a Notice of Default and initiate nonjudicial foreclosure.” Id. at 973. 

It is uncontested that Plaintiffs’ loan was owned by World Savings Bank. In the instant 

case, the documents indicate Wells Fargo held valid title to Plaintiffs’ mortgage loan. Defendants’ 

Exhibit A is a Deed of Trust signed by Plaintiff Gualberto. Docket No. 4-2 (“Defendants’ Ex.

A”). Defendants’ Exhibit H is a Substitution of Trustee which recognizes that Plaintiff Gualberto 

was the original trustor, Golden West Savings Association was the original trustee, and World 

Savings Bank was the original beneficiary. Docket No. 4-2 (“Defendants’ Ex. H”). Further, this 

document shows that Wells Fargo is the successor by merger for this loan. Id. Plaintiffs assert

that the chain of title was in fact defective because of a prior transfer of the loan to the WSR 30 

Trust. In support, the FAC merely alleges that a substantial number of Wachovia loans were sold 

to the WSR 30 Trust and that Plaintiffs’ loan is consistent with the loans in the WSR 30 Trust. 

Beyond this fact, Plaintiffs do not claim to know that their loan was in fact sold to the WSR 30 

Trust. It cites no document directly proving their supposition. Plaintiffs’ assertion is based purely 

on inference, a speculative one at that.

Courts have rejected similar claims. In Hammons v. Wells Fargo Bank, N.A., a court 

dismissed a complaint because “[a]dding it up, plaintiffs offer the essentially bare allegation that 

Wells Fargo lacked authority to foreclose, and do so in the face of contrary evidence that appears 

plainly to belie their assertion. As such, the FAC does not contain sufficient factual allegations to 

“state a claim to relief that is plausible on its face.’” Hammons v. Wells Fargo Bank, N.A., No. 

15-CV-04897-RS, 2016 WL 845295, at *5 (N.D. Cal. Mar. 4, 2016) (quoting Iqbal, 556 U.S. at 

678). The court in that case ultimately held that the FAC lacked factual allegations to state a claim 

for relief that was plausible on its face. Id. 

Plaintiffs’ complaint here fails for the same reason. There is no plausible claim that 

Defendant Wells Fargo did not actually have legal title based merely on the fact that Wachovia 

sold “substantially all” of its mortgage loans. Plaintiffs do not contend that the public documents 

that Defendant Wells Fargo used to foreclose do not purport to give it legal title. Plaintiffs’ 

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Exhibit C, which at most states “all securities not classified as trading were classified as available 

for sale,” adds no probative force to Plaintiffs’ speculation. Docket No. 12-1 (“Plaintiffs’ Ex. C”). 

Plaintiffs failed to provide any plausible factual allegation that Defendants acted 

unlawfully in pursuing a foreclosure proceeding or that Defendant Wells Fargo did not have valid 

legal title. For this reason, the Court finds that Plaintiffs have not alleged a plausible claim for 

relief. 

III. CONCLUSION

As the Court finds that Plaintiffs’ claims are preempted by HOLA and that Plaintiffs failed 

to plead sufficient factual allegations. Defendants’ motion to dismiss pursuant to rule 12(b)(6) is 

GRANTED with prejudice. 

This order disposes of Docket No. 4. The Clerk is instructed to enter judgment and close 

the case.

IT IS SO ORDERED.

Dated: March 5, 2019

______________________________________

EDWARD M. CHEN

United States District Judge

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