Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-00074/USCOURTS-casd-3_12-cv-00074-0/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 28:2201 Declaratory Judgement

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JANICE MUELLER, an individual,

Plaintiff,

CASE NO. 12cv0074 WQH-BLM

ORDER

vs.

BANK OF AMERICA, N.A.; WELLS

FARGO BANK, N.A., as trustee for the

Certificate holders of Banc of America

Mortgage Securities, Inc., Mortgage PassThrough Certificates, Series2004-C; and

Does 1–10, inclusive,

Defendants.

HAYES, Judge:

The matter before the Court is the Motion to Dismiss filed by Defendants Bank of

America, N.A. and Wells Fargo Bank, N.A. (ECF No. 14).

BACKGROUND

On January 10, 2012, Plaintiff initiated this action by filing a complaint. (ECF No. 1).

On March 9, 2012, Plaintiff filed a First Amended Complaint (“Complaint”). (ECF No. 12). 

In the Complaint, Plaintiff asserts the following nine causes of action against Defendants: (1)

declaratory relief to determine the status of Defendants’ claims to Plaintiff’s property, (2)

negligence against Bank of America, (3) negligent infliction of emotional distress against Bank

of America, (4) violation of 15 U.S.C. § 1641(g) of the Truth in Lending Act (“TILA”) against

Wells Fargo, (5) violation of 12 U.S.C. § 2605 of the Real Estate Settlement Practices Act

(“RESPA”) against Bank of America, (6) violation of California Business and Professional

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Code § 17200, et seq. against Bank of America and Wells Fargo, (7) breach of contract against

Bank of America and Wells Fargo, (8) breach of the implied covenant of good faith and fair

dealing against Bank of America and Wells Fargo, and (9) violation of California Civil Code

§§ 2923.5 and 2924 against Bank of America and Wells Fargo. 

On March 26, 2012, Defendants Bank of America and Wells Fargo filed a Motion to

Dismiss. (ECF No. 14). On April 19, 2012, Plaintiff filed an Opposition. (ECF No. 16-1). 

I. Allegations of the Complaint

On February 5, 2004, Janice and Gary Mueller executed a Note and Deed of Trust in

favor of Bank of America in the amount of $770,000 secured by a deed of trust for real

property located at 1544 Rancho Encinitas Drive, Encinitas, California 92024. Until July

2010, Plaintiff made timely mortgage payments on the property. 

In March 2010, Plaintiff and her husband commenced contentious divorce proceedings. 

In June 2010, Plaintiff anticipated that she would not be able to make her mortgage payments. 

Plaintiff contacted Bank of America Servicing to discuss options for a loan modification. 

Plaintiff was told by Bank of America representatives that she could apply for a “special

forbearance program for victims of domestic abuse.” (ECF No. 12 at 8). In July 2010, as

anticipated, Plaintiff was unable to make payments on the mortgage and stopped. 

On September 29, 2011, Bank of America executed an Assignment of the Deed of Trust

to Wells Fargo Bank, N.A. and a Substitution of the Trustee of the Deed of Trust to

ReconTrust Company, N.A. (Complaint Exh. C, D; ECF No. 12-3, 12-4). On September 29,

2011, ReconTrust recorded a Notice of Default on the property on behalf of the beneficiary. 

(Complaint Exh. E; ECF No. 12-5). The Assignment, Substitution, and Notice of Default are

invalid. No legal transfer ever occurred because the documents were all signed by “a ‘robosigner’ - an individual who simply signs thousands of foreclosure documents on behalf of

several entities without any personal knowledge or corporate authority.” Id. at 14.

Between June 2010 and November 2011, Plaintiff engaged in exhaustive efforts with

Bank of America in an attempt to apply for the special forbearance program and to obtain

information relating to the Wells Fargo transfer. Plaintiff submitted numerous loan

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modification applications, financial documents, and banks statements to Bank of America. 

Bank of America representatives provided contradictory information to Plaintiff, transferred

her among numerous representatives, and claimed to have lost or to have never received her

application materials. 

On December 15, 2011, Plaintiff sent Bank of America a Qualified Written Request

(“QWR”) to verify and validate her debt. Bank of America failed to acknowledge receipt of

Plaintiff’s QWR and has yet to substantively respond to the QWR. Plaintiff does not dispute

that she owes money on the mortgage, but disputes the amount owed and seeks the Court’s

assistance in determining the true creditor. 

II. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for “failure to state a claim

upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure

8(a) provides: “A pleading that states a claim for relief must contain ... a short and plain

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

Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal

theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police

Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). 

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

requires more than labels and conclusions, and a formulaic recitation of the elements of a cause

of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. R.

Civ. P. 8(a)(2)). When considering a motion to dismiss, a court must accept as true all

“well-pleaded factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). However, a

court is not “required to accept as true allegations that are merely conclusory, unwarranted

deductions of fact, or unreasonable inferences.” Sprewell v. Golden State Warriors, 266 F.3d

979, 988 (9th Cir. 2001). “In sum, for a complaint to survive a motion to dismiss, the

non-conclusory factual content, and reasonable inferences from that content, must be plausibly

suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Service, 572 F.3d

962, 969 (9th Cir. 2009) (quotations omitted).

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DISCUSSION

I. Negligence and Negligent Infliction of Emotional Distress

Plaintiff alleges that “BOA Servicing, as the purported mortgage servicer, has a duty

to exercise reasonable care and skill with regard to engaging Plaintiff in loan modification and

special forbearance negotiations and handling Plaintiff’s forbearance and loan modification

applications with reasonable care....” (ECF No. 12 at 20). Plaintiff alleges that “BOA

Servicing breached their duty when it repeatedly mismanaged Plaintiff’s loan assistance

applications, repeatedly requested Plaintiff resubmit identical documents, failed to handle and

maintain each of her documents with reasonable care, and expressed to Plaintiff that she would

qualify for forbearance and other foreclosure assistance programs.” Id. at 21. Plaintiff alleges

that “BOA Servicing went beyond its conventional role as Plaintiff’s purported mortgage

servicer to offer Plaintiff an opportunity for a special forbearance and to modify her Loan....

BOA Servicing actively participated in special forbearance and loan modification negotiations

and efforts giving rise to a duty owed to Plaintiff.” Id. Plaintiff alleges that, “[a]s a result of

the acts of BOA Servicing, Plaintiff suffered, and continues to suffer from extreme anxiety,

loss of sleep, loss of appetite, and other psychological and emotional issues.” Id. at 22.

Defendants contend that lenders and loan servicers owe no duty in processing loans or

making representations regarding loan modifications. Defendants contend that Plaintiff fails

to allege a tort duty of care owed by Defendants, as required for a negligence claim.

Defendants contend that California law does not recognize a negligent infliction of emotional

distress claim without the successful pleading of a negligence claim. 

Plaintiff contends that Bank of America stepped out of its role of a silent lender when

it offered to review Plaintiff for a loan modification and that Bank of America had a duty to

process Plaintiff’s loan modification application. 

“Under California law, the elements of a claim for negligence are ‘(a) a legal duty to

use due care; (b) a breach of such legal duty; and (c) the breach as the proximate or legal cause

of the resulting injury.’” Walters v. Fidelity Mortg. of CA, 730 F.Supp.2d 1185, 1205 -1206

(E.D. Cal. 2010) quoting Ladd v. County of San Mateo, 12 Cal.4th 913, 917 (1996). “The

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existence of a duty of care owed by a defendant to a plaintiff is a prerequisite to establishing

a claim for negligence.” Nymark v. Heart Fed. Savings & Loan Assn., 231 Cal. App. 3d 1089,

1095 (1991) (citation omitted). In California, “[t]he ‘negligent causing of emotional distress

is not an independent tort but the tort of negligence, involving the usual duty and causation

issues.’” Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., 129

Cal.App.4th 1228, 1264 (2005) (quotations omitted) (emphasis in original). 

“[A]s a general rule, a financial institution owes no duty of care to a borrower when the

institution’s involvement in the loan transaction does not exceed the scope of its conventional

role as a mere lender of money.” Nymark, 231 Cal. App. 3d at 1096 (citation omitted). 

“Liability to a borrower for negligence arises only when the lender actively participates in the

financed enterprise beyond the domain of the usual money lender.” Id. (quotations omitted). 

There is no statutory duty in California for lenders to agree to a mortgage loan modification.

Hamilton v. Greenwich Investors XXVI, LLC, 195 Cal.App.4th 1602, 1617 (2011) citing

Mabry v. Superior Court, 185 Cal.App.4th 208, 222-23 (2010) (the relevant California statute 

“merely expresses the hope that lenders will offer loan modifications on certain terms”; the

statute “conspicuously does not require lenders to take any action.”); see also Sullivan v. JP

Morgan Chase Bank, NA, 725 F.Supp.2d 1087, 1094 (E.D. Cal. 2010) (allegations that a lender

has misrepresented that loan modifications would be made are insufficient to form the basis

of a negligence claim). 

In this case, Plaintiff alleges that Bank of America mishandled and misinformed her

about loan modification opportunities with Bank of America. The Court finds that these

allegations are insufficient to form the basis of a negligence claim because Bank of America

had no duty to provide any loan modification to Plaintiff and Bank of America did “not exceed

the scope of its conventional role as a mere lender of money” by discussing loan modification

opportunities with Plaintiff. Nymark, 231 Cal. App. 3d at 1096. Plaintiff fails to allege

sufficient facts to show that a tort duty of care existed between Plaintiff and Bank of America,

and fails to plead sufficient facts to show that Plaintiff is entitled to relief on a claim for

negligence or negligent infliction of emotional distress. Plaintiff’s second cause of action for

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negligence and third cause of action for negligent infliction of emotional distress are dismissed.

II. Violation of TILA 15 U.S.C. § 1641(g) 

Plaintiff alleges that Walls Fargo violated 15 U.S.C. § 1641(g) because Wells Fargo

“did not provide Plaintiff with written notice within 30 days after the date on which they were

allegedly assigned the Mortgage.” (ECF No. 12 at 24). Plaintiff alleges that she “never

received any notice indicating the exact date of the purported Assignment of the interest in her

Note.... how to reach an agent or party having authority to act on Wells Fargo Trustee’s

behalf.... the location of the place where transfer of ownership of the debt is recorded.... [or]

any other relevant information regarding the new creditor....” Id. at 24-25. 

Defendants contend that Plaintiff received the necessary information relating to the

assignment to Wells Fargo on the Assignment and Notice of Default dated September 29,

2011. Plaintiff contends that the information necessary under TILA was not conveyed in the

Assignment and Notice of Default. 

15 U.S.C. § 1641(g) provides that, “not later than 30 days after the date on which a

mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is

the new owner or assignee of the debt shall notify the borrower in writing of such transfer,

including (A) the identity, address, telephone number of the new creditor; (B) the date of

transfer; (C) how to reach an agent or party having authority to act on behalf of the new

creditor; (D) the location of the place where transfer of ownership of the debt is recorded; and

(E) any other relevant information regarding the new creditor.” 15 U.S.C. § 1641(g). A

creditor that fails to comply with any requirement imposed under § 1641(g)(1) faces liability

for “any actual damage sustained by such a person as a result of the failure.” 15 U.S.C. §

1640(a)(1). 

The September 29, 2011 Assignment, attached to the Complaint, provides notice of the

date of the transfer and the location where the transfer is recorded. The September 29, 2011

Notice of Default, attached to the Complaint, provides the identity, address, and telephone

number of the new creditor and information regarding how to reach an agent or party with

authority to act on behalf of the new creditor. Plaintiff fails to allege facts sufficient to show

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that the Assignment or Notice of Default was insufficient or that Defendant Wells Fargo

violated 15 U.S.C. § 1641(g). Plaintiff’s fourth cause of action for a violation of 15 U.S.C. §

1641(g) is dismissed.

III. Violation of RESPA 12 U.S.C. § 2605

Plaintiff alleges that she sent Bank of America Servicing a Qualified Written Request

(“QWR”) on December 15, 2011. “The QWR... contained requests for information of the

Loan, specifically the identity and contact information of the creditor of Plaintiff’s Note, a

complete loan history, accumulated late fees and charges, and requested information to verify

the validity of the purported debt owed to Wells Fargo Trustee.” (ECF No. 12 at 26). 

Plaintiff alleges that “BOA Servicing did not acknowledge the receipt of Plaintiff’s QWR...

and has yet to substantively respond.” (ECF No. 12 at 26). Plaintiff alleges that her “actual

pecuniary damages include, but are not limited to, the over calculation and overpayment of

interest on Plaintiff’s Loan, the costs of repairing Plaintiff's credit, the reduction and/or

elimination of Plaintiff’s credit limits, costs associated with removing the cloud on her

Property title and setting aside the trustee’s sale, and attorneys’ fees and costs....” Id. at 27.

Defendants contend that the QWR does not request information relating to the servicing

of Plaintiff’s loan. Defendants contend that Plaintiff fails to allege sufficient pecuniary

damages as a result of Bank of America’s alleged failure to respond to the QWR. 

Plaintiff contends that the December 15, 2011 letter was a proper QWR because it

contained a statement of the reasons Plaintiff thought the account was in error and sought the

identity of the creditor, accumulated fees and charges, and a complete loan transaction history.

Section 2605 of RESPA requires that “[i]f any servicer of a federally related mortgage

loan receives a qualified written request from the borrower (or an agent of the borrower) for

information relating to the servicing of such loan, the servicer shall provide a written response

acknowledging receipt of the correspondence within 20 days ... unless the action requested is

taken within such period.” 12 U.S.C. § 2605(e)(1)(A). A qualified written request is “a

written correspondence, ... that– (i) includes, or otherwise enables the servicer to identify, the

name and account of the borrower; and (ii) includes a statement of the reasons for the belief

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of the borrower, to the extent applicable, that the account is in error or provides sufficient

detail to the servicer regarding other information sought by the borrower.” 12 U.S.C. §

2605(e)(1)(B). When a loan servicer receives a qualified written request, it must either correct

the borrower’s account or, after conducting an investigation, provide the borrower with a

written explanation of: (1) why the servicer believes the account is correct; or (2) why the

requested information is unavailable. See 12 U.S.C. § 2605(e)(2).

“Not all requests that relate to the loan are related to the servicing of the loan.” 

Williams v. Wells Fargo, N.A., No. C 10-00399, 2010 WL 1463521, at *3 (N.D. Cal. April 13,

2010) (citations omitted). A loan servicer only has a duty to respond if the information request

is related to loan servicing. See, e.g., id.; Champlaie v. BAC Home Loans Servicing, LP, 706

F.Supp.2d 1029, 1043 (E.D.Cal. 2009). If a loan servicer fails to comply with the provisions

of § 2605, a borrower shall be entitled to “any actual damages to the borrower as a result of

the failure” and “any additional damages, as the court may allow, in the case of a pattern or

practice of noncompliance with the requirements of [§ 2605].” 12 U.S.C. § 2605(f)(1).

“Numerous courts have read Section 2605 as requiring a showing of pecuniary damages

to state a claim.” Molina v. Washington Mutual Bank, No. 09-CV-00894-IEG (AJB), 2010

WL 431439 at *7 (S.D. Cal. Jan. 29, 2010) (collecting cases). “This pleading requirement has

the effect of limiting the cause of action to circumstances in which plaintiff can show that a

failure to respond or give notice has caused them actual harm.” Shepherd v. Am. Home Mortg.

Services, Inc., Case No. Civ. 2:09-1916 WBS GGH, 2009 WL 4505925 at * 3 (E.D. Cal. Nov.

20, 2009) (citation omitted). A plaintiff is entitled to recover for the loss that relates to the

RESPA violation, not for all losses related to foreclosure activity. See Lal v. American Home

Servicing, Inc., 680 F. Supp. 2d 1218, 1223 (E.D. Cal. 2010) (“[T]he loss alleged must be

related to the RESPA violation itself.”); Torres v. Wells Fargo Home Mortg., Inc., No. C

10-04761 CW, 2011 WL 11506 at *8 (N.D. Cal. Jan. 4, 2011) (“The plaintiff must also allege

a causal relationship between the alleged damages and the RESPA violation.”).

///

Plaintiff’s December 15, 2011 letter requests general information regarding the status

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and validity of the loan, such as “a true and present copy of the promissory note and deed of

trust... a complete life of loan transaction history... copies of all collection notes and

communication files... [and all] screen shots of all system accounts... associated with the loan.” 

(ECF No. 12-7 at 2-3). Plaintiff fails to allege facts to show that the letter she sent to Bank of

America on December 15, 2011 “related to the servicing of the loan.” Williams, 2010 WL

1463521, at *3. Plaintiff further fails to plead non-conclusory factual allegations indicating

how she was damaged by the alleged failure of Bank of America to respond to the QWR. Cf.

Allen v. United Fin. Mortg. Corp., 660 F. Supp. 2d 1089, 1097 (N.D. Cal. 2009) (“Allen only

offers the conclusory statement that ‘damages consist of the loss of plaintiff’s home together

with his attorney fees.’ He has not actually attempted to show that the alleged RESPA

violations caused any kind of pecuniary loss (indeed, his loss of property appears to have been

caused by his default).”). 

Plaintiff fails to allege facts to show that the failure of Bank of America to comply with

RESPA, as opposed to Plaintiff’s default, plausibly caused the damages alleged in the

Complaint. Cf. Lawther v. OneWest Bank, No. C-10-54, 2010 WL 4936797, at *7 (N.D. Cal.

Nov. 30, 2010) (granting motion to dismiss RESPA claim for failure to adequately allege

actual damages because “[w]hat remains unexplained ... is how the QWR failure itself is

causally connected to the claimed distress of Lawther or his family”). Plaintiff has failed to

allege sufficient facts to support a claim for damages under RESPA. Plaintiff’s fifth cause of

action for a violation of RESPA is dismissed.

IV. Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair

Dealing

Plaintiff alleges: “If the Court finds that Wells Fargo Trustee is a successor in interest

to the Deed of Trust pursuant to the terms of the Deed of Trust, Plaintiff alleges that Wells

Fargo Trustee breached the Deed of Trust by improperly crediting and debiting their account.” 

(ECF No. 12 at 33). Plaintiff alleges that “Plaintiff substantially performed all of her

conditions in the Deed of Trust.... Defendant Wells Fargo Trustee breached the Deed of Trust

by failing to apply the payments made by Plaintiff in the order of priority set forth in [the

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Deed], and this resulted in improper fees and taxes being added to the balance of the Loan.” 

Id. “Plaintiff alleges that Defendants Wells Fargo Trustee breached the implied promise of

good faith and fair dealing by making it impossible for Plaintiff to carry out her obligations

under the contract because of the improperly applied payments and addition of interest and

improper fees to her account.” Id. at 34. 

Defendants contend that Plaintiff fails to allege sufficient facts to show that Defendants

improperly charged and taxed Plaintiff’s account. Defendants contend that Plaintiff fails to

allege a breach of contract claim because Plaintiff herself failed to perform under the deed of

trust when she defaulted on her mortgage payments. Defendants contend that Plaintiff alleged

no special relationship that would permit a claim for tortious breach of the implied covenant

of good faith and fair dealing under California law. 

Plaintiff contends that Defendant Wells Fargo misapplied payments before Plaintiff

defaulted on the loan and before Plaintiff breached her performance on that contract. 

“The essential elements of a breach of contract claim are: (1) the contract, (2) plaintiff's

performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting

damages to plaintiff.” Hamilton v. Greenwich Investors XXVI, LLC, 195 Cal.App.4th 1602,

1614 (2011) (quotations omitted). “It is elementary that one party to a contract cannot compel

another to perform while he himself is in default.” Durell v. Sharp Healthcare, 183

Cal.App.4th 1350, 1367 (2010) (quotations omitted). 

Under California law, “[t]he covenant of good faith and fair dealing, implied by law in

every contract, exists merely to prevent one contracting party from unfairly frustrating the

other party’s right to receive the benefits of the agreement actually made. The covenant thus

cannot be endowed with an existence independent of its contractual underpinnings. It cannot

impose substantive duties or limits on the contracting parties beyond those incorporated in the

specific terms of their agreement.” Guz v. Bechtel Nat’l, Inc., 24 Cal. 4th 317, 349-50 (2000)

(quotation omitted). “[T]he implied covenant is limited to assuring compliance with the

express terms of the contract, and cannot be extended to create obligations not contemplated

in the contract.” Racine & Laramie, Ltd. v. Dep’t of Parks & Recreation, 11 Cal. App. 4th

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1026, 1032 (1992). Moreover, “tort recovery for breach of the covenant is available only in

limited circumstances, generally involving a special relationship between the contracting

parties, such as the relationship between an insured and its insurer.” Bionghi v. Metro. Water

Dist., 70 Cal. App. 4th 1358, 1370 (1999). 

Plaintiff’s allegations that Wells Fargo improperly credited and debited her account are

conclusory and lack any factual support. Plaintiff fails to identify the manner in which Wells

Fargo misapplied payments or how that misapplication “resulted in improper fees and taxes

being added to the balance of the Loan.” (ECF No. 12 at 33). There are no facts in the

Complaint to support that there is “a special relationship between the contracting parties” in

this case. Bionghi, 70 Cal. App. 4th at 1370; see also Price v. Wells Fargo Bank, 213 Cal.

App. 3d 465, 476 (1989) (“A debt is not a trust and there is not a fiduciary relation between

debtor and creditor as such.”); Mitsui Mfrs. Bank v. Super. Ct., 212 Cal. App. 3d 726, 729

(1989) (“reject[ing] [the] argument that [the covenant] ... should encompass normal

commercial banking transactions”). Plaintiff has failed to allege sufficient facts to support a

claim for breach of contract and breach of the covenant of good faith and fair dealing. 

Plaintiff’s seventh cause of action for breach of contract and eighth cause of action for breach

of the covenant of good faith and fair dealing are dismissed.

V. Violation of California Civil Code §§ 2923.5 and 2924 

Plaintiff alleges that “Defendants had a duty to comply with the foreclosure avoidance

and workout plan requirements of Civil Code section 2923.5.” (ECF No. 12 at 36). Plaintiff

alleges that Defendants “failed and refused to: (1) evaluate Plaintiff’s financial condition

regarding foreclosure avoidance; (2) advise Plaintiff of her statutory right to meet with

Defendant regarding such foreclosure avoidance; and (3) advise Plaintiff of the toll-free federal

Department of Housing and Urban Development (“HDD”) telephone number regarding

counseling opportunities to avoid the subject foreclosure.” Id. at 38. Plaintiff alleges that

Defendants “failed to give proper notice of the Notice of Default, which was apparently

recorded on or about October 3, 2011.... Said failures are in direct violation of the notice and

recording requirements set forth in California Civil Code section 2923.5.” Id. at 37. Plaintiff

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alleges that she “spent hundreds of hours with BOA Servicing to explore options to avoid

foreclosure” and that “ BOA Servicing actively participated in special forbearance and loan

modification negotiations....” Id. at 21, 37. 

Defendants contend that the Notice of Default was proper and that alternatives to

foreclosure were provided to Plaintiff. Plaintiff contends that proper notice was never given.

California Civil Code § 2924(a)(1) provides that “[t]he trustee, mortgagee, or

beneficiary, or any of their authorized agents” may commence the non-judicial foreclosure

process by recording and serving a notice of default. In this case, the September 29, 2010 

Notice of Default, attached to the Complaint, plainly states that ReconTrust commenced the

foreclosure process by recording the Notice of Default acting as an agent for the beneficiary,

in compliance with § 2924(a)(1).

California Civil Code § 2923.5 provides that “[a] mortgagee, trustee, beneficiary, or

authorized agent may not file a notice of default ... until 30 days after” the “mortgagee,

beneficiary, or authorized agent ... contact[s] the borrower in person or by telephone in order

to assess the borrower’s financial situation and explore options for the borrower to avoid

foreclosure.” Cal. Civ. Code § 2923.5(a)(1), (2). In this case, Plaintiff alleges in the

Complaint that she spent “hundreds of hours” engaged in foreclosure negotiations with Bank

of America starting as early as June 2010. Plaintiff alleges that she actively participated with

Bank of America in “special forbearance and loan modification negotiations.” (ECF No. 12

at 21, 37). Plaintiff’s allegations in the Complaint reflect extensive negotiations with

Defendants regarding Plaintiff’s financial situations and foreclosure options. See Davenport

v. Litton Loan Servicing, LP, 725 F.Supp.2d 862, 877 (N.D.Cal. 2010) (dismissing § 2923.5

claim because plaintiffs’ allegation of loan modification talks negated a claim that § 2923.5

was violated). 

Plaintiff fails to allege sufficient facts to show that Defendants violated Cal. Civil Code

§§ 2923.5 and 2924. Plaintiff’s ninth cause of action for violation of Cal. Civil Code §§

2923.5 and 2924 is dismissed. 

VI. Declaratory Relief 

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Plaintiff alleges that the “purported Assignment has no value” because it was signed by

an employee without proper authority who did not review Plaintiff’s loan file before executing

the Assignment. (ECF No. 12 at 18). Plaintiff alleges that she does not know the proper

creditor on her loan and Wells Fargo lacks authority to enact foreclosure proceedings on the

property. Plaintiff’s cause of action for declaratory relief “requests that the Court make a

finding and issue appropriate orders stating that none of the named Defendants or Doe

Defendants, have any right or interest in Plaintiff s Note, Deed of Trust, or the Property which

authorizes them, in fact or as a matter of law, to collect Plaintiffs mortgage payments or

enforce the terms of the Note or Deed of Trust in any manner....” (ECF No. 12 at 19). 

Defendants contend that they are not required to show authorization to foreclose upon

the property and that Plaintiff lacks standing to challenge the transfer to Wells Fargo. Plaintiff

contends that she has alleged a substantial controversy between the parties regarding the

property that warrants declaratory relief from the Court. 

“A complaint for declaratory relief is legally sufficient if it sets forth facts showing the

existence of an actual controversy relating to the legal rights and duties of the respective

parties under a contract and requests that these rights and duties be adjudged by the court.” 

Browning v. Aymard, 224 Cal. App. 2d 277, 280 (1964). “It is not essential, to entitle a

plaintiff to seek declaratory relief, that he should establish his right to a favorable declaration.”

Id.; see also Shepherd v. Paul A. Hauser, Inc., 138 Cal. App. 384, 387-88 (1934). 

Under California law, a plaintiff has no right to bring suit to determine whether an entity

initiating foreclosure is authorized to do so. Gomes v. Countrywide Home Loans, Inc., 192

Cal.App.4th 1149, 1154–55 (2011) (explaining that California’s “comprehensive” statutory

scheme governing nonjudicial foreclosure provides “no grounds for implying such an action”).

A plaintiff may be able to bring suit when the complaint alleges a “specific factual basis for

alleging” that foreclosure is unlawful but this basis must be supported by more than a bare

assertion. See id. at 1155. 

///

In this case, Plaintiff alleges that an actual controversy exists as to the legal rights and 

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duties of the parties regarding the loans on certain real property. Plaintiff has not identified

the factual basis of the controversy. Plaintiff makes conclusory allegations that she does not

believe that Defendants have any rights to the property. However, Plaintiff fails to allege

“more than labels and conclusions.” Bell Atl. Corp., 550 U.S. at 555. Plaintiff’s first cause

of action for declaratory relief is dismissed. 

VII. Sixth Cause of Action: Violation of Cal. Bus. and Prof. Code § 17200, et seq.

Plaintiff alleges that “Defendants have engaged in unfair, unlawful, and fraudulent

business practices in the State of California” in violation of California Business and

Professions Code § 17200, et seq. (ECF No. 12 at 28). 

Defendants contend that Plaintiff fails to state a claim for violation under any other

claim as required by the statute. Plaintiff contends that Defendants wrongfully collected

payments from Plaintiff, violated RESPA and TILA, and attempted to collect on the mortgage

under false pretenses. Plaintiff contends that such conduct forms the basis for a claim under 

California Business and Professions Code § 17200.

California law prohibits unfair competition, defined as “any unlawful, unfair or

fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. “By proscribing ‘any

unlawful’ business practice, section 17200 borrows violations of other laws and treats them

as unlawful practices that the unfair competition law makes independently actionable.” 

Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999)

(quoting Cal. Bus. & Prof. Code § 17200). “Virtually any law—federal, state or local—can

serve as a predicate for an action under Business and Professions Code section 17200.” 

Durell, 183 Cal.App.4th at 1361 (quotations omitted). 

Plaintiff has failed to allege any “unlawful practices that the unfair competition law

makes independently actionable.” Cel-Tech Commc’ns, Inc., 20 Cal. 4th at 180. Plaintiff fails

to allege sufficient facts to support a claim for violation of California’s Business and

Professions Code section 17200. Plaintiff’s sixth cause of action for violation of California’s

Business and Professions Code section 17200 is dismissed.

CONCLUSION

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The Motion to Dismiss filed by Defendants (ECF No. 14) is GRANTED. Plaintiff

may file a motion for leave to file an amended complaint, accompanied by the proposed

amended complaint, no later than twenty (20) days from the date of this Order. 

DATED: August 1, 2012

WILLIAM Q. HAYES

United States District Judge

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