Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-01367/USCOURTS-casd-3_14-cv-01367-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

JUDY LANE, ET AL.,

 Plaintiffs, 

Case No. 14-cv-01367-BAS(WVG) 

ORDER GRANTING 

DEFENDANT’S MOTION TO 

DISMISS 

(ECF No. 5) 

 v. 

SUNTRUST MORTGAGE, INC.,

 Defendant. 

 

 Plaintiffs Judy Lane and Pepper Lane (collectively “Plaintiffs”) commenced 

this action on May 5, 2014 by filing a complaint in San Diego Superior Court 

alleging Defendant Suntrust Mortgage, Inc. (“Defendant”) violated the California 

Homeowner’s Bill of Rights and California’s Unfair Competition Law (“UCL”), 

California Business and Professions Code §§ 17200, et seq., and seeking 

declaratory and injunctive relief. Defendant removed this action to federal court on 

June 4, 2014 on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332. 

Defendant now moves to dismiss the Complaint in its entirety pursuant to Federal 

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Rule of Procedure 12(b)(6). 

The Court finds this motion suitable for determination on the papers 

submitted and without oral argument. See Civ. L.R. 7.1(d)(1). For the reasons set 

forth below, this Court GRANTS Defendant’s motion to dismiss. 

I. BACKGROUND 

Plaintiffs fell behind in their mortgage payments on the subject property.1

(ECF No. 1-1 (“Compl.” at ¶ 8). They “made multiple attempts to secure a loan 

modification [from Defendant] in or about the following dates: February 2013; 

August 16, 2013” and November 7, 2013. (Id. at ¶¶ 31, 35.) “Defendant denied 

Plaintiffs a loan modification after each attempt.” (Id. at ¶ 37.) On or about 

January 14, 2014, Defendant recorded a Notice of Default. (Id. at ¶ 33.) On or 

about January 16, 2014, Plaintiffs received a Notice of Trustee Sale, recorded on 

April 17, 2014, with a sale date set for May 8, 2014. (Id. at ¶ 34.) Throughout the 

proceedings, Plaintiffs dealt with Defendant’s employee, Marilyn Young. (Id. at ¶¶ 

17, 21, 35, Exhs. B, C and H.) Ms. Young was designated as Defendant’s “point of 

contact.” (Id.) “Independent review shows that Plaintiffs qualified for a loan 

modification.” (Id. at ¶ 38.) 

II. STATEMENT OF LAW 

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil 

Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. 

Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court 

must accept all allegations of material fact pleaded in the complaint as true and 

must construe them and draw all reasonable inferences from them in favor of the 

 1

 There appears to be some confusion about the “subject property” at 

issue. The Complaint initially states that the “subject property” is located at 11733 

Treadwell Drive, Poway, CA, 92064-6112 (Compl. at ¶ 3), but then lists the subject 

property address as 11252 Willowwood Drive, San Diego, CA, 92127 (id. at ¶ 7). 

Since this latter address is the one listed in the accompanying exhibits, this Court 

assumes the Willowwood address is correct. 

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nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 

1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed 

factual allegations; rather, it must plead “enough facts to state a claim to relief that 

is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A 

claim has facial plausibility when the plaintiff pleads factual content that allows the 

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

misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 

550 U.S. at 556). “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.” Id. at 678 (quoting Twombly, 550 U.S. at 557) (internal 

quotations omitted). 

“[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to 

relief’ requires more than labels and conclusions, and a formulaic recitation of the 

elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (quoting 

Papasan v. Allain, 478 U.S. 265, 286 (1986)). A court need not accept “legal 

conclusions” as true. Iqbal, 556 U.S. at 678. Despite the deference the court must 

pay to the plaintiff’s allegations, it is not proper for the court to assume that “the 

[plaintiff] can prove facts that [he or she] has not alleged or that defendants have 

violated the . . . laws in ways that have not been alleged.” Associated Gen. 

Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). 

Generally, courts may not consider material outside the complaint when 

ruling on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 

Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990); Branch v. Tunnell, 14 F.3d 449, 453 

(9th Cir. 1994) (overruled on other grounds by Galbraith v. Cnty. of Santa Clara, 

307 F.3d 1119, 1121 (9th Cir. 2002)). “However, material which is properly 

submitted as part of the complaint may be considered.” Hal Roach Studios, Inc., 

896 F.2d at 1542 n.19. The court may also consider documents specifically 

identified in the complaint whose authenticity is not questioned by the parties. 

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Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superseded by statute on 

other grounds); see also Branch, 14 F.3d at 453–54. The court may consider such 

documents so long as they are referenced in the complaint, even if they are not 

physically attached to the pleading. Branch, 14 F.3d at 453–54; see also Parrino v. 

FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998) (extending rule to documents upon 

which the plaintiff’s complaint “necessarily relies” but which are not explicitly 

incorporated in the complaint). Moreover, the court may consider the full text of 

those documents even when the complaint quotes only selected portions. Fecht, 70 

F.3d at 1080 n.1. The court also considers materials of which it takes judicial 

notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). 

As a general rule, a court freely grants leave to amend a complaint it 

dismisses. Fed. R. Civ. P. 15(a); Schreiber Distrib. Co. v. Serv-Well Furniture Co., 

806 F.2d 1393, 1401 (9th Cir. 1986). The court may deny leave to amend, 

however, when “[it] determines that the allegation of other facts consistent with the 

challenged pleading could not possibly cure the deficiency.” Schreiber Distrib. 

Co., 806 F.2d at 1401 (citing Bonanno v. Thomas, 309 F.2d 320, 322 (9th Cir. 

1962)). 

III. DISCUSSION 

 A. The California Homeowner Bill of Rights 

 1. Background 

 The California Homeowner Bill of Rights (“HBOR”) became effective in 

California on January 1, 2013. Carroll v. Nationstar Mortg., LLC, No. 13cv4490, 

2013 WL 3188725, at *2 (C.D. Cal. June 21, 2013). The purpose of the act was to 

ensure that borrowers facing foreclosure “are considered for, and have a meaningful 

opportunity to obtain, available loss mitigation options, if any, offered by or 

through the borrower’s mortgage servicer, such as loan modifications or other 

alternatives to foreclosure.” Cal. Civ. Code § 2923.4(a). It was the intent of the 

Legislature in passing the HBOR “that the mortgage servicer offer the borrower a 

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loan modification or workout plan if such a modification or plan is consistent with 

its contractual or other authority.” Cal. Civ. Code § 2923.6(b). However, 

“[n]othing in the act...shall be interpreted to require a particular result of that 

process.” Cal. Civ. Code § 2923.4(a). While California Civil Code section 2923.5 

requires a mortgage servicer to contact a borrower “to assess the borrower’s 

financial situation and explore options for the borrower to avoid foreclosure” prior 

to recording a notice of default, “[t]here is nothing in section 2923.5 that requires 

the lender to rewrite or modify the loan.” Graham v. U.S. Bank, N.A., No. 

13cv1613, 2013 WL 2285184, at * (N.D. Cal. May 23, 2013) (quoting Mabry v. 

Superior Court, 185 Cal.App.4th 208, 214 (2010)). 

In relevant part, the HBOR provides that “[i]f a borrower submits a complete 

application for a...loan modification..., a mortgage servicer...shall not record a 

notice of default or notice of sale, or conduct a trustee’s sale, while the 

complete...loan modification application is pending.” Cal. Civ. Code § 2923.6(c). 

In other words, the mortgagor may not engage in “dual-tracking” or proceeding 

with foreclosure while simultaneously considering a lender’s eligibility for loan 

modification. See Stiles v. Wells Fargo Bank, No. 14cv04169, 2014 WL 7146950, 

at *7 (N.D. Cal. Dec. 15, 2014); Jolley v. Chase Home Finance, LLC, 213 

Cal.App.4th 872, 904-05 (2013). For an application to be deemed “complete,” the 

borrower must have “supplied the mortgage servicer with all documents required by 

the mortgage servicer within the reasonable timeframes specified by the mortgage 

servicer.” Cal. Civ. Code § 2923.6(h). 

Furthermore, the HBOR provides: 

In order to minimize the risk of borrowers submitting multiple 

applications for...loan modifications for the purpose of delay, the 

mortgage servicer shall not be obligated to evaluate applications from 

borrowers who have already been evaluated or afforded a fair 

opportunity to be evaluated...unless there has been a material change 

in the borrower’s financial circumstances since the date of the 

borrower’s previous application and that change is documented by the 

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borrower and submitted to the mortgage servicer. 

Cal. Civ. Code § 2923.6(g). 

Finally, upon request from a borrower “who requests a foreclosure prevention 

alternative, the mortgage servicer shall promptly establish a single point of contact” 

who “shall be responsible for... [c]ommunicating the process by which a borrower 

may apply for an available foreclosure prevention alternative and the deadline for 

any required submissions to be considered for these options,” and “[e]nsuring that a 

borrower is considered for all foreclosure prevention alternatives offered by, or 

through, the mortgage servicer, if any.” Cal. Civ. Code § 2923.7(a) and (b). The 

single point of contact may be “an individual or team of personnel.” Cal. Civ. Code 

§ 2923.7(e). 

 2. Analysis 

Plaintiff’s first cause of action alleges a violation of the HBOR, claiming 

Defendant: (1) did not explore meaningful alternatives to foreclosure under 

California Civil Code section 2923.4(a); (2) engaged in dual-tracking when it 

noticed a trustee’s sale while an application for loan modification was pending in 

violation of California Civil Code section 2923.6(c); (3) failed to establish a single 

point of contact until after the Notice of Default was recorded in 2014 in violation 

of California Civil Code section 2923.7(a); and (4) failed to discuss alternatives to 

foreclosure in violation of California Civil Code section 2923.7(b). For the reasons 

set forth below, the Court finds that Plaintiff’s first cause of action must be 

dismissed. 

First, as pointed out in Defendant’s moving papers, section 2923.4 does not 

provide a specific right or impose a specific obligation. It merely states the general 

purpose of the HBOR. Since there can be no cause of action under section 2923.4, 

any cause of action based on this subsection must be dismissed with prejudice. 

Second, the allegations in the Complaint belie the claim that Defendant 

engaged in dual-tracking, as prohibited by section 2923.6(c). According to the 

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Complaint, loan modifications were requested in February, August, and November 

of 2013. (Compl. at ¶¶ 31, 35.) Defendant denied all of these requests. (Id. at ¶ 

37.) Then, on or about January 14, 2014, Defendant recorded a Notice of Default 

(id. at ¶ 33), and on or about January 16, 2014, Plaintiff received a Notice of 

Trustee Sale, recorded on April 17, 2014, with a sale date set for May 5, 2014 (id. at 

¶ 34). Thus, according to the Complaint, Defendant denied the loan modification 

requests before proceeding with the foreclosure. 

In their Response to the Motion to Dismiss, Plaintiffs now claim that they 

“also applied for a loan modification” on May 5, 2014, which incidentally is the 

same day the present Complaint alleging dual-tracking was filed. (ECF No. 6 at pp. 

1-2.) This allegation is noticeably absent from the Complaint. In addition, this 

would be after the Notice of Default and the Notice of Trustee Sale were served and 

recorded. (See Compl. at ¶¶ 33, 34.) Furthermore, there is no allegation that this 

loan modification was “completed” as required under section 2923.6(h), and, 

finally, to minimize just this type of situation, the HBOR does not require a 

mortgage servicer to evaluate multiple loan modification requests “unless there has 

been a material change in the borrower’s financial circumstances.” Cal. Civ. Code 

§ 2923.6(g). No such material change has been alleged. Accordingly, Plaintiffs fail 

to state a claim of dual-tracking. 

Third, the allegations in the Complaint support that Defendant did establish a 

single point of contact prior to the Notice of Default being recorded in January 

2014. Throughout the proceedings, Plaintiffs allege they dealt with Defendant’s 

employee, Marilyn Young. (Compl. at ¶¶ 17, 21, 35, Exhs. B, C, E, and H.) Ms. 

Young was officially designated as the “point of contact” no later than October 29, 

2013. (Id. at Ex. C.) Moreover, nothing indicates Plaintiffs did not know who to 

contact or had difficulty reaching this point of contact. In fact, all the allegations 

are that Defendant responded to Plaintiffs’ inquiries and provided contact 

information at every opportunity. Thus, the Court finds Plaintiffs fail to state a 

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claim under the HBOR premised on Defendant failing to establish a single point of 

contact in violation of California Civil Code section 2923.7(a). 

Finally, Plaintiffs allege that Defendant’s point of contact failed to discuss 

alternatives to foreclosure and that “[i]ndependent review shows that Plaintiffs 

qualified for a loan modification.” (Compl. at ¶ 38 and pp. 5-6.) However, the 

Complaint alleges that alternatives to foreclosure were discussed and pursued as 

early as mid-2013. (See Compl. at ¶¶ 14-29, 35, Exs. C, E.) In addition, while 

Section 2923.7 makes the “point of contact” responsible for “[e]nsuring that a 

borrower is considered for all foreclosure prevention alternatives offered by, or 

through, the mortgage servicer, if any,” there is no allegation to support the 

contention that Defendant failed to ensure that Plaintiffs were considered for all 

available foreclosure prevention alternatives. See Cal. Civ. Code § 2923.7(b)(4). 

Simply alleging that “independent review” showed Plaintiffs were entitled to a loan 

modification, without alleging by whom and what this independent review was or 

how Defendant failed to follow it is not sufficient to pass muster under Rule 

12(b)(6). Plaintiffs’ first cause of action alleging a violation of the HBOR is, 

therefore, dismissed with leave to amend. 

B. Unfair Competition Law and Declaratory and Injunctive Relief 

Since Plaintiffs fail to state a cause of action under the HBOR, the second 

and third causes of action for unfair business practices in violation of the UCL and 

for declaratory and injunctive relief must also be dismissed. See Walker v. 

Countrywide Home Loans, Inc., 98 Cal.App.4th 1158, 1170 (2002) (the UCL 

“creates an independent action when a business practice violates some other law”); 

Krantz v. BT Visual Images, LLC, 89 Cal.App.4th 164, 178 (2001) (a claim “for 

relief under the unfair competition law...stand[s] or fall[s] depending on the fate of 

the antecedent substantive cause[] of action.”); McDowell v. Watson, 59 

Cal.App.4th 1155, 1159 (1997) (“Injunctive relief is a remedy and not, in itself, a 

cause of action.”) (quotations and citation omitted).

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IV. CONCLUSION 

 For the foregoing reasons, Defendant’s Motion to Dismiss (ECF No. 5) is 

GRANTED, with leave to amend. If Plaintiffs choose to file an amended 

complaint, they must do so no later than March 9, 2015. 

IT IS SO ORDERED. 

DATED: January 28, 2015 

 

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