Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-02700/USCOURTS-caed-2_09-cv-02700-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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 The complaint names a fourth defendant, Old Republic Default 1

Management Services. Before this case was removed from state

court, Old Republic Default Management Services filed a declaration

of non-monetary status. Notice of Removal, Ex. 3. The parties

stipulate that pursuant to this state court designation, Old

Republic is merely a nominal party in this action who is not

subject to liability. See Amaro v. Option One Mortgage Corp., No.

EDCV 08-1498, 2009 U.S. Dist. LEXIS 2855, *3, 2009 WL 103302,*1

(C.D. Cal. Jan. 14, 2009). Given the timing and stipulation, I need

not consider this issue further.

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

JOHN J. FALCOCCHIA and

RACHAEL D. FALCOCCHIA,

NO. CIV. S-09-2700 LKK/GGH

Plaintiffs,

v.

O R D E R

SAXON MORTGAGE, INC., et al.,

Defendants.

 /

This case involves the foreclosure of plaintiffs’ mortgage.

Their First Amended Complaint (“FAC”) names enumerates nine causes

of action. Defendants Saxon Mortgage, Inc., Saxon Mortgage

Services, Inc., and Deutsche Bank Trust Company Americas move to

dismiss all claims against them. The court concluded that oral 1

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 These facts are taken from the allegations in the FAC unless 2

otherwise specified. The allegations are taken as true for

purposes of this motion only.

 The FAC specifically alleges that this sum was borrowed from 3

both Saxon Mortgage and Saxon Mortgage Services. FAC ¶ 13. It

appears unlikely that this is actually the case. Defendants have

not provided the promissory note. The deed of trust indicates that

Saxon Mortgage is the sole lender. Defs.’ RFJN Ex. 1, 1. It is

unclear whether, at this stage, the judicially noticeable deed of

trust is sufficient to refute plaintiffs’ allegation that Saxon

Mortgage Services was also a lender. In any event, resolution of

this issue is not necessary to this motion.

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argument was not necessary in this matter, and decides the motion

on the papers. For the reasons stated below, the motion to dismiss

is granted in part.

I. BACKGROUND

A. Refinancing2

On or about July 12, 2006, Greg Roh (who is not party to this

suit) approached plaintiffs soliciting refinancing of a loan

currently secured by plaintiffs’ property in Yuba City, California.

FAC ¶ 13. Roh, a mortgage broker, informed plaintiffs that a

mortgage from defendants Saxon Mortgage and Saxon Mortgage Services

would give them the “best deal” and “best interest rates” available

on the market. Id. 

On July 13, 2006, in a loan brokered by Roh, plaintiffs

borrowed $408,000 from Saxon Mortgage and Saxon Mortgage Services

to refinance plaintiffs’ existing home loan. Defendants’ Request 3

for Judicial Notice (“Defs.’ RFJN”) Ex. 1; FAC ¶ 13. The new loan

was secured by a deed of trust on the Yuba City property, which was

recorded in Sutter County, California. FAC ¶¶ 15-16. The deed of

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The court notes that the existence of an agency relationship 4

is a legal conclusion. The court therefore does not assume this

allegation to be true.

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trust identifies the plaintiffs as borrowers, Saxon Mortgage as

lender, and First American Title as trustee. Defs.’ RFJN Ex. 1.

It appears that Saxon Mortgage Services was the servicer of the

loan.

Plaintiffs allege several defects with the initial

transaction. First, contrary to Roh’s representations as broker,

the loan did not provide the best rates or best deal. FAC ¶ 13.

Roh allegedly acted as agent for the Saxon defendants, and these

defendants should have known that Roh’s representations were

false. Id. Plaintiffs further argue that the loan transaction 4

was procedurally defective, in that plaintiffs did not receive (1)

signed loan documents at the time of closing or within a reasonable

amount of time after signing, (2) disclosure of finance charges and

loan interest rate prior to closing, and (3) a completed notice of

right to cancel indicating the date that the right expires. FAC

¶ 35. 

B. Events Subsequent to Refinancing

Nine months after the initial transaction, on April 18, 2007,

Saxon Mortgage assigned its beneficial interest under the

promissory note and deed of trust to defendant Deutsche Bank Trust

Company Americas. Defs.’ RFJN Ex. 3 (recorded notice of

assignment). Pursuant to this assignment, Saxon Mortgage Servicing

remained the “attorney-in-fact” for the beneficiary, which the

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court understands to mean that Saxon Mortgage Servicing continued

to service the loan. Id.

Plaintiffs then defaulted on the loan. Defendants twice

issued and then rescinded a notice of default and notice of trustee

sale. Defs.’ RFJN Ex. 2, 4-8. On May 13, 2008, defendant Old

Republic Default Management Services, who had not previously been

involved in the loan, issued a third notice of default and election

to sell. Id. Ex. 9. Old Republic purported to issue this document

“as agent for the Beneficiary.” Id. A year later, on May 14,

2009, Old Republic recorded a document substituting Old Republic

for First American Title as trustee. Old Republic also recorded

a third notice of trustee’s sale. Defs.’ RFJN Ex. 10, 11. The

trustee’s sale was set for June 2, 2009. Id. Ex. 11.

Plaintiffs argue these final three documents (notice of

default, trustee sale, and substitution) should have been mailed

to plaintiffs’ “legal mailing address,” but that they were not,

despite defendants’ knowledge of this address. FAC ¶¶ 18, 19, 22.

Plaintiffs further argue that the notice of trustee’s sale and

substitution of trustee were not certified as true and correct

copies of the originals and did not bear Sutter County instrument

numbers identifying them as official records. FAC ¶ 21. 

Plaintiffs then sent letters to defendants stating plaintiffs’

intent to file a temporary restraining order to enjoin the

foreclosure sale, demanding immediate cancellation of the

foreclosure sale, and demanding that defendant Old Republic Default

Management Services immediately stay all further action and comply

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with California Civil Code section 2924. FAC ¶ 24. Defendants did

not respond. 

Plaintiffs also sent a separate letter to Saxon Mortgage and

Saxon Mortgage Services which demanded cancellation of the

foreclosure sale and rescission of the loan for violations of the

Truth in Lending Act (“TILA”). FAC ¶ 25. Plaintiffs contend that

this letter constituted a qualified written request under the Real

Estate Settlement Procedures Act (“RESPA”). Saxon Mortgage and

Saxon Mortgage Services did not respond. FAC ¶ 26.

II. STANDARD

A. Standard for a Motion to Dismiss

A Fed. R. Civ. P. 12(b)(6) motion challenges a complaint’s

compliance with the pleading requirements provided by the Federal

Rules. Under Fed. R. Civ. P. 8(a)(2), a pleading must contain a

“short and plain statement of the claim showing that the pleader

is entitled to relief.” The complaint must give defendant “fair

notice of what the claim is and the grounds upon which it rests.”

Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal

quotation and modification omitted). To meet this requirement, the

complaint must be supported by factual allegations. Ashcroft v.

Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1950 (2009). “While legal

conclusions can provide the framework of a complaint,” neither

legal conclusions nor conclusory statements are themselves

sufficient, and such statements are not entitled to a presumption

of truth. Id. at 1949-50. Iqbal and Twombly therefore prescribe

a two step process for evaluation of motions to dismiss. The court

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first identifies the non-conclusory factual allegations, and the

court then determines whether these allegations, taken as true and

construed in the light most favorable to the plaintiff, “plausibly

give rise to an entitlement to relief.” Id.; Erickson v. Pardus,

551 U.S. 89 (2007). 

“Plausibility,” as it is used in Twombly and Iqbal, does not

refer to the likelihood that a pleader will succeed in proving the

allegations. Instead, it refers to whether the non-conclusory

factual allegations, when assumed to be true, “allow[] the court

to draw the reasonable inference that the defendant is liable for

the misconduct alleged.” Iqbal, 129 S.Ct. at 1949. “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.” Id. (quoting Twombly, 550 U.S. at 557). A

complaint may fail to show a right to relief either by lacking a

cognizable legal theory or by lacking sufficient facts alleged

under a cognizable legal theory. Balistreri v. Pacifica Police

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

III. ANALYSIS

A. Failure to Allege Ability to Make Tender

Defendants first argue that all of plaintiffs’ claims are

barred by plaintiffs’ failure to allege their ability to tender

the loan proceeds. Defendants assert that Abdallah v. United

Savings Bank, 43 Cal. App. 4th 1101 (1996), requires a valid

tender of payment to bring any claim that arises from a

foreclosure sale.

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As an initial matter, state law cannot provide a defense to

federal claims. Haywood v. Drown, ___ U.S. ___, ___, 129 S. Ct.

2108, 2130-31 (2009). Defendants do not argue or cite to any

authority discussing a federal tender requirement, or tender as

a prerequisite for plaintiffs’ TILA and RESPA. Although this

court has discussed these requirements elsewhere, the court

declines to do so sua sponte here.

Even as to the state law claims, most of these claims fail

for reasons unrelated to tender, as explained below. The sole

surviving state law claim is for violation of California’s

unfair competition law, premised on conduct that was unlawful in

that it violated RESPA. The RESPA claim is for failure to

respond to a qualified written request. It is not clear whether

this claim is “for irregularity in the [foreclosure] sale

procedure” and thus within the scope of Abdallah. Abdallah, 43

Cal. App. 4th at 1109. Defendants argue that all of plaintiffs’

claims are “‘implicitly integrated’” into the foreclosure

process, in that none “would have any relevance if it weren’t

for the pending foreclosure.” Defs.’ Reply at 3 (quoting

Arnolds Management Corp. v. Eischen, 158 Cal. App. 3d 575, 579

(1984)). Assuming for purposes of this motion that defendants’

interpretation of “implicitly integrated” is correct,

defendants’ argument fails because the RESPA claim and the

derivative unfair competition claim could both be brought in the

absence of a threatened or actual foreclosure. 

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B. Truth in Lending Act

Plaintiffs argue that Saxon Mortgage and Saxon Mortgage

Services failed to make the disclosures required by TILA at the

time of the initial transaction, and that plaintiffs are

entitled to civil damages and rescission of the loan as a

result. Defendants do not address the substance of this

argument, instead arguing that the TILA claims are time barred. 

TILA provides a one year statute of limitations for civil

damages claims and a three year statute of repose for rescission

claims. 15 U.S.C. §§ 1635(f) and 1640(e). Both of these

periods commenced at the time the loan was entered, on or around

July 12, 2006. King v. California, 784 F.2d 910, 914 (9th Cir.

1986). These periods would normally have expired on July 12,

2007 and July 12, 2009, respectively, whereas plaintiffs first

alleged TILA violations in the FAC filed on August 28, 2009. 

The court considers the arguments regarding each claim in turn.

1. Civil Damages Claim

Plaintiffs argue that their civil damages claim is timely

because of equitable tolling, in that plaintiffs did not have

“reasonable opportunity to discover” the facts underlying the

claim at an earlier time. Equitable tolling is available under

TILA’s limitations period for civil damages. King, 784 F.2d at

915. Here, however, plaintiffs have not alleged facts showing

that they are potentially entitled to equitable tolling.

Because the statute of limitations is an affirmative

defense, its invocation in the context of a motion to dismiss

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raises specific concerns, especially when the plaintiffs raise

an equitable tolling argument. Huynh v. Chase Manhattan Bank,

465 F.3d 992, 1003-04 (9th Cir. 2006) (citing Supermail Cargo,

Inc. v. United States, 68 F.3d 1204, 1206 (9th Cir. 1995)). A

motion to dismiss on statute of limitations grounds cannot be

granted if “the complaint, liberally construed in light of our

‘notice pleading’ system, adequately alleges facts showing the

potential applicability of the equitable tolling doctrine.” 

Cervantes v. City of San Diego, 5 F.3d 1273, 1277 (9th Cir.

1993); see also Morales v. City of Los Angeles, 214 F.3d 1151,

1153, 1155 (9th Cir. 2000). Because equitable tolling turns on

matters outside of the pleadings, the Supreme Court’s recent

decisions in Twombly and Iqbal, which concerned the requirements

of Fed. R. Civ. P. 8, do not provide reason to revisit this

rule.

The Ninth Circuit has held that plaintiffs failed to show

the potential applicability of the equitable tolling doctrine

where “it [was] clear that [plaintiffs] have had the information

necessary to bring suit . . . for many years,” and plaintiffs

did not argue that “extraordinary circumstances beyond [their]

control made it impossible to file the claims on time.” Huynh,

465 F.3d at 1004. In this case, at the time of the transaction,

plaintiffs knew what disclosures were and were not made. FAC ¶

91. Plaintiffs also knew the terms of the transaction as

specified in these disclosures. Id. Plaintiffs have not

alleged that any of this information was inaccurate, or that

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 In opposing this motion, plaintiffs argue that defendants 5

misrepresented facts, citing to paragraph 38 of the FAC. Neither

plaintiffs’ opposition nor this paragraph of the FAC provide any

indication as to what facts were misrepresented. As such, this

allegation is conclusory, and is disregarded for purposes of the

instant motion.

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plaintiffs were in any other way ignorant of the factual basis

of their TILA damages claim at the time that claim accrued.5

C.f. Supermail Cargo, 68 F.3d at 1208; see also Cervantes, 5

F.3d at 1277. Because plaintiffs’ claim is based on failure to

disclose information, plaintiffs were aware of the claim’s basis

when they knew that information was not disclosed. Plaintiffs

therefore have not demonstrated a possibility of tolling, and

their TILA civil damages claim is time barred.

 2. Rescission Claim

Unlike TILA’s one year period for civil damages claims, the

three year period for TILA rescission claims is an “absolute”

statute of repose that cannot be tolled. Miguel v. Country

Funding Corp, 309 F.3d 1161, 1164 (9th Cir. 2002) (King, 784

F.2d at 913); see also Beach v. Ocwen Fed. Bank, 523 U.S. 410,

412 (1998) (“[Section] 1635(f) completely extinguishes the right

of rescission at the end of the 3-year period.”). This period

began on or around July 12, 2006, and expired around July 12,

2009.

Plaintiffs raise two further arguments as to why their TILA

rescission claim is timely. First, plaintiffs argue that they

sought rescission in the state court complaint filed on June 1,

2009. The court has been unable to find anything in the initial

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 The court may infer that the letter regarding intent to file 6

a temporary restraining order was sent before the application for

a TRO was filed, therefore before June 1, 2009. However,

plaintiffs’ allegations indicate that the letter demanding

rescission was a separate document. FAC ¶¶ 24, 25.

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complaint, application, or attached affidavits suggesting that

plaintiffs sought rescission at that time. The initial filing

contended that the notice of default and notice of trustee’s

sale were procedurally defective, but plaintiffs made no

contentions regarding the initial transaction, nor did

plaintiffs argue that they were entitled to rescind the entire

loan. Accordingly, it is clear that plaintiffs did not seek to

rescind through the initial state complaint.

Plaintiffs’ second argument is that they sent a letter

demanding rescission before the right expired, separate from any

judicial proceeding. FAC ¶ 25. Plaintiffs have not indicated

when this letter was sent. For purposes of this motion, the 6

court assumes that the letter was sent prior to expiration of

the right to rescind, although the court does not decide whether

the Ninth Circuit’s limitations jurisprudence or the liberal

pleading standards compel such an assumption. Notification of

intent to exercise the right to rescind is a step of the

rescission process. 15 U.S.C. § 1635, 12 C.F.R. § 226.23(a)(2). 

Nonetheless, courts have divided as to whether timely initiation

of the rescission process entitles plaintiffs to bring a

rescission action where the complaint itself is filed outside

the three year period. 

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The Ninth Circuit case most closely on point is Miguel, 309

F.3d 1161. In Miguel, the borrower sent notice of intent to

rescind to the wrong entity, and then filed a complaint seeking

rescission from that entity, both within the three year period. 

After the three year period expired, the borrower moved to amend

the complaint to name the proper entity, arguing that the

amended complaint should relate back under Fed. R. Civ. P. 15(c)

and therefore be timely. Miguel held that because plaintiff

“did not attempt to rescind against the proper entity within the

three-year limitation period, her right to rescind expired” at

the end of that time. 309 F.3d at 1164-65. Because the three

year period is jurisdictional, Rule 15(c) could not be used to

treat the corrected complaint as relating back and therefore

timely. Id. at 1165. “[Section] 1635(f) is a statute of

repose, depriving the courts of subject matter jurisdiction when

a § 1635 claim is brought outside the three-year limitation

period.” Id. at 1164.

Several courts have interpreted Miguel as barring claims

for rescission on facts identical in pertinent regard to those

in this case. Ramos v. CitiMortgage, Inc., 2009 U.S. Dist.

LEXIS 956 (E.D. Cal. Jan. 7, 2009) (Shubb, J.), Caligiuri v.

Columbia River Bank Mortg. Group, No. Civ. 07-3003-PA, 2007 U.S.

Dist. LEXIS 39264, 2007 WL 1560623 at *5 (D.Or. 2007), Cazares

v. Household Fin. Corp., No. CV 04-6887, 2005 U.S. Dist. LEXIS

39222, at *24-25 (C.D. Cal. July 26, 2005). In particular,

these cases relied on Miguel’s statement that “section 1635(f)

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 It is not clear what would be the measure of damages for 7

such an action.

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represents an ‘absolute limitation on rescission actions’ which

bars any claims filed more than three years after the

consummation of the transaction.” Miguel, 309 F.3d at 1164

(quoting King, 784 F.2d at 913); see also Beach, 523 U.S. at

412. These cases held that although the borrower was barred from

bringing a rescission claim based on the initial misconduct

giving rise to a right to rescind, the borrower could bring a

civil damages action predicated on the creditor’s subsequent

failure to respond to the notice of rescission. Plaintiff has 7

not argued that such a claim is present here. 

Another court of this district has reached the opposite

conclusion after extensive discussion. Santos v. Countrywide

Home Loans, No. 09-CV-00912, 2009 U.S. Dist. LEXIS 71736, *6-14

(E.D. Cal. Aug. 14, 2009) (Ishii, J.). Santos interpreted

Miguel as confined to its facts, where there was no timely and

proper notice of rescission, and thus inapplicable to a case

such as this one. Although Santos accurately characterized the

facts in Miguel, it appears to this court that the statements

quoted above explicitly sweeps broader than the facts of that

case. Insofar as Miguel discussed the one year limitations

period for actions arising from failure to respond to a notice

of rescission, this limitations period applies to civil damages

actions brought under 15 U.S.C. section 1640, and not to actions

for rescission under the separate framework of section 1635. To

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the extent that Santos relied on authority from other circuits,

or agued that Miguel itself was not compelled by the Supreme

Court’s decision in Beach, the court does not find Santos

persuasive.

Accordingly, plaintiffs did not file a claim seeking

rescission within the three year period, this period cannot be

tolled, and plaintiffs’ allegation that they sent a notice of

rescission within the three year period is irrelevant. The

motion to dismiss is therefore granted as to plaintiffs’ TILA

claim for rescission.

C. Real Estate Settlement Procedures Act

Plaintiffs claim that Saxon Mortgage and Saxon Mortgage

Services violated RESPA by failing to respond to a qualified

written request as required by 12 U.S.C. section 2605(e)(2). 

Defendants argue that this claim is time barred by 12 U.S.C. §

2614, which creates a three year statute of limitations for

violations of section 2605.

Defendants appear to argue that this limitation period

began to run from the completion of the transaction. Because

the conduct complained of is the failure to respond to the

alleged qualified written request, the claim accrued, and the

claim began to run, at the time of that failure. 

Plaintiffs do not allege when this was, or when their

qualified written request was sent. This court has previously

held that so long as the complaint provides some notice as to

when the complained-of conduct occurred specific allegations of

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time are not required. Baldain v. Am. Home Mortg. Servicing,

Inc., No. CIV. S-09-0931, 2010 U.S. Dist. LEXIS 5671, *14 (E.D.

Cal. Jan. 5, 2010), see also Dickens v. District of Columbia,

502 F. Supp. 2d 90, 94 (D.D.C. 2007), Castillo v. Norton, 219

F.R.D. 155, 162 (D. Ariz. 2003), Famolare, Inc. v. Edison Bros.

Stores, Inc., 525 F. Supp. 940, 949 (E.D. Cal. 1981), Supreme

Wine Co. v. Distributors of New England, Inc., 198 F. Supp. 318,

320 (D. Mass. 1961), Kuenzell v. United States, 20 F.R.D. 96, 99

(N.D. Cal. 1957). Here, “[w]hile the[] allegations do not

conclusively demonstrate the applicability or non-applicability

of the statute of limitations, they provide sufficient notice to

defendants that the statute of limitations may be at issue, and

thereby allow defendants to formulate an answer.” Baldain, 2010

U.S. Dist. LEXIS 5671, *16. Because a motion to dismiss may be

granted on statute of limitations grounds only when there is no

possibility that the claim is timely, defendants’ motion must be

denied.

D. Negligence

Plaintiffs’ second cause of action is for negligence as to

Saxon Mortgage and Saxon Mortgage Services. Under California

law, the elements of a claim for negligence are that (1)

defendant had a legal duty to plaintiff, (2) defendant breached

this duty, (3) defendant was the proximate and legal cause of

plaintiff’s injury, and (4) plaintiff suffered damage. See Cal.

Civ. Code § 1714; Ladd v. County of San Mateo, 12 Cal. 4th 913,

917 (1996). Plaintiffs allege that defendants were negligent in

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Plaintiffs’ opposition memorandum adds an additional basis 8

for negligence, arguing that defendants were negligent in failing

to properly disclose and explain the loan’s terms. Pls.’ Opp’n at

9-10. The FAC alleges that this conduct was a breach of contract

and a violation of TILA, but provides no notice to defendants of

the claim that these duties sound in negligence. Thus, while this

court has previously held that this type of wrongdoing might sound

in negligence, plaintiffs have not stated such a claim here.

Champlaie, 2009 WL 3429622, *24. Plaintiffs may raise this theory

of liability in an amended complaint. Until that time, the court

expresses no opinion as to whether such a claim may be properly

brought in this case.

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(1) directing plaintiffs into a loan they were not qualified

for, FAC ¶¶ 47-48, and (2) “[taking] payments to which they were

not entitled, charg[ing] fees they were not entitled to charge

and [making] or otherwise authoriz[ing] reporting to various

credit bureaus wrongfully,” FAC ¶ 49. 

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As to offering a loan plaintiffs were not qualified for, a

lender “owes no duty of care to the [borrower] in approving [a]

loan.” Wagner v. Benson, 101 Cal. App. 3d 27, 35 (1980). 

Insofar as Saxon Mortgage Services acted as a servicer rather

than a lender, it appears that servicers have no connection with

the approval of the loan. If, contrary to this appearance,

Saxon Mortgage Servicing did participate in the approval of the

loan in its role as a servicer, this specific holding from

Wagner is equally applicable to loan servicers. More broadly,

plaintiffs have not alleged that the Saxon defendants acted as

other than a lender or a servicer. See also Champlaie v. BAC

Home Loans Servicing, LP, No. S-09-1316, 2009 U.S. Dist. LEXIS

102285, *19, 2009 WL 3429622, *24 (E.D. Cal. Oct. 22, 2009)

As to the remaining allegations, assuming without deciding

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Plaintiffs’ complaint cites California Civil Code sections 9

2924(b) and (f), rather than 2924b and 2924f. Section 2924(b) is

a provision providing a species of good faith immunity for the

trustee, and section 2924(f) is a sunset clause. Neither section

imposes obligations or may constitute a basis for liability. The

court interprets plaintiffs’ complaint as referring to 2924b and

2924f.

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that defendants had a duty of care sounding in negligence

regarding servicing the loan, plaintiffs have not alleged a

breach of this duty. To the extent that plaintiffs offer any

explanation as to why these acts were wrongful, plaintiffs argue

that defendants were not entitled to these fees because of the

defects with the notices and the loan origination. These

defects, however, would at most allow plaintiffs to rescind or

void the loan. Because the loan had not been rescinded at the

time of the alleged acts, and absent any other allegation of

wrongdoing, defendants’ actions were permitted. Thus, assuming

that a duty existed as to servicing the loan, plaintiffs have

not alleged a breach of this duty.

E. Violations of California’s Rosenthal Fair Debt Collection

Practices Act

Plaintiffs’ eighth cause of action is for violation of

California’s Rosenthal Act by Saxon Mortgage and Saxon Mortgage

Services. Plaintiffs stated their non-opposition to dismissal

of this claim, and plaintiffs have not requested leave to amend

this claim. Plaintiffs’ eighth cause of action is therefore

dismissed with prejudice.

F. Violations of California Civil Code §§ 2924b and 2924f9

Plaintiffs’ fifth cause of action argues that all

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defendants violated California Civil Code sections 2924b and

2924f by failing to mail documents to the proper address and by

failing to certify these documents as official copies. 

Section 2924b(b)(1) requires a party authorized to record a

notice of default to send by certified or registered mail a copy

of the notice of default to “each trustor or mortgagor at his or

her last known address if different from the address specified

in the deed of trust or mortgage with power of sale.” Although

plaintiffs allege that notice was not sent to the proper

address, plaintiffs have not alleged that they failed to receive

any of the challenged notices, or even that receipt of these

notices was delayed. It appears that any violation of this

provision was therefore harmless. Plaintiffs’ sole argument on

the issue is the assertion that: “Even assuming, arguendo, that

Plaintiffs received notice of the scheduled foreclosure sale,

this assumption is not sufficient to invalidate the intent of

the statutory protections behind CA Civil Code Sec. 2924 (b) and

2924 (f) and defendants requisite statutory duty of providing

adequate notice. [sic]” Plaintiffs’ Opposition to Motion to

Dismiss 16. Absent any citation to authority, evidence of

legislative intent, or evidence of actual harm, the court

concludes that a harmless violation of this section is not

actionable.

Plaintiffs separately argue that the notices were improper

because they were not certified and because they lacked a

“Sutter county instrument number.” It does not appear that the

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statutes referred to by plaintiffs impose such a requirement,

and plaintiffs have not argued that the notices violate the

requirements actually imposed by the statutes. Each notice

document bears a serial number at the top, in the same field as

a bar code, time stamp, and the name of the county recorder. 

California Civil Code sections 2924b(a) provides that a notice

must contain either “the book and page where the deed of trust

or mortgage is recorded,” or a recorder’s number. There is no

requirement of a “county instrument number.” California Civil

Code section 2924f is relevant only insofar as it requires the

notice of sale to satisfy California Government Code section

6043. Section 6043 imposes no requirements regarding

certification or placement of a recorder’s number. Plaintiffs

have not argued that any of these specific requirements were

violated, and plaintiffs have not cited any authority imposing

the requirements alleged in the complaint. This claim is

dismissed.

G. Wrongful Foreclosure

Plaintiffs also bring a claim for wrongful foreclosure

against Saxon Mortgage and Saxon Mortgage Services. This claim

is based on the allegation that neither defendant possesses the

promissory note, FAC ¶¶ 70-72, that the notice of default

violated California Civil Code section 2923.5(b), FAC ¶ 73, that

defendants violated RESPA, FAC ¶ 74, and that defendants

violated requirements imposed by the Troubled Asset Relief

Program (“TARP”) and the Emergency Economic Stabilization Act of

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2008 (“EESA”), FAC ¶¶ 76-69. Dismissal is appropriate as to

each of these arguments.

First, plaintiffs concede the invalidity of their “possess

the note” argument. See also Champlaie, 2009 WL 3429622 at *13.

Second, the notice of default was recorded on May 18, 2008,

whereas Civil Code section 2923.5(b) did not become effective

until September 6, 2008. Plaintiff has not offered any argument

as to why these requirements should apply retroactively, and the

court is not aware of any such argument.

Third, although the court finds that plaintiffs have stated

a claim under section 5 of RESPA, 12 U.S.C. § 2605, this claim

does not provide a basis for injunctive relief. 12 U.S.C. §

2605(f)(1). The RESPA claim therefore cannot invalidate a

foreclosure or render the foreclosure wrongful. Amodo v. Homeq

Servicing Corp., No. CIV. S-10-177, 2010 WL 347730, *2 (E.D.

Cal. Jan. 22, 2010).

Fourth and finally, plaintiffs argue that defendants were

obliged to “participate in mortgage foreclosure mitigation

programs consistent with guidelines the Treasury released as

part of its Making Home Affordable” program. FAC ¶ 76. 

Plaintiffs argue that defendants were subject to these

guidelines under the TARP and EESA because defendants received

federal funds. Plaintiffs assert that for mortgages subject to

these guidelines, lenders must “‘temporarily suspend[] [any

foreclosure action] during the trial period, or while borrowers

are considered for alternative foreclosure prevention options.’” 

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 These guidelines were promulgated pursuant to the authority 10

provided the EESA section 109, codified at 12 U.S.C. § 5219. At

the time of this writing, these guidelines were available at

http://w w w . u s t r e a s . g o v / p r e s s / r e l e a s e s/reports/

modification_program_guidelines.pdf. The language quoted by

plaintiffs appears on page 3.

 In their reply brief, defendants also argue that these 11

guidelines are inapplicable because (1) the subject loan is not

owned by Fannie Mae or Freddie Mac, (2) the loan is a voluntary

program, and (3) the guidelines do not provide a private right of

action. Because these arguments were not raised in defendants’

initial memorandum, the court disregards them.

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FAC ¶ 78. Although plaintiffs do not cite these guidelines in

either their complaint or their oppositions, plaintiffs

apparently refer to the Treasury Department guidelines

promulgated on March 4, 2009.10

Defendants argue that this they have complied with these

guidelines because the guidelines only apply to homes that are

the borrowers’ primary residence, and because defendants

actually suspended the foreclosure process to renegotiate the

loan. Here, plaintiffs’ allegation that the subject property 11

is not their “legal mailing address” is implicitly based on the

theory that plaintiffs do not reside at the property. 

Plaintiffs have not sought to refute this implication, or to

otherwise respond to this argument.

Because each theory offered by plaintiffs in support of

their wrongful foreclosure claim fails, the court dismisses this

claim. Dismissal is without prejudice, and plaintiffs are

granted leave to amend the deficiencies identified above.

////

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H. Contract Claims

The FAC alleges a claim for breach of oral contract as to

Saxon Mortgage and Saxon Mortgage Services and a claim for

breach of the implied covenant of good faith and fair dealing as

to all defendants (plaintiffs’ first and third claims,

respectively). Plaintiffs concede that the oral contract claim

must be dismissed, but plaintiffs oppose dismissal of the good

faith and fair dealing claim.

Under California law, every contract carries with it an

implied covenant of good faith and fair dealing. Carma

Developers (Cal.), Inc. v. Marathon Development California,

Inc., 2 Cal. 4th 342, 371 (1992). This duty requires

contracting parties to exercise discretion given to them under

the contract in a way consistent with the parties’ expectations

at the time of contracting. Id. at 372-73. A party breaches

this duty when it acts in a way that deprives another

contracting party of benefits conferred by the contract.

The FAC roots plaintiffs’ good faith claim in “aforesaid

contract.” FAC ¶ 52. The only contract identified by the

complaint, however, is the alleged oral contract, which

plaintiffs concede is unenforceable. Plaintiffs implicitly

concede that this defeats the claim for good faith, offering no

argument in support of this claim and instead merely requesting

leave to amend. Plaintiffs’ good faith claim is therefore

dismissed without prejudice. 

////

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I. Violations of California Business and Professions Code Sec.

17200

California’s Unfair Competition Law, Cal. Bus. & Prof. Code

§ 17200, (“UCL”) proscribes “unlawful, unfair or fraudulent”

business acts and practices. Plaintiffs’ sole allegation

specifying the conduct underlying the UCL claim is that

“[d]efendants committed unlawful, unfair, and/or fraudulent

business practices, as defined by California Business and

Professions Code Sec. 17200.” FAC ¶ 57.

The FAC therefore fails to provide notice of the basis for

any claim arising out of unfair or fraudulent business

practices.

Plaintiffs’ UCL claim must proceed, if at all, on the theory

that defendants acted unlawfully. As discussed elsewhere,

plaintiffs have adequately alleged unlawful acts in that the

Saxon defendants violated RESPA. These allegations identify

predicate acts supporting a UCL claim.

Plaintiffs’ UCL claim is therefore dismissed as to Deutsche

Bank Trust Company Americas, and as to the Saxon defendants

insofar as the claim is predicated upon unfair or fraudulent

conduct or unlawful conduct other than a violation of RESPA.

IV. CONCLUSION

For the reasons stated above, defendants’ motion to dismiss,

Dkt. No. 6, is GRANTED IN PART.

The court DENIES the motion as to the following claims:

1. Fourth Claim, under the UCL, as to Saxon Mortgage, Inc.

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and Saxon Mortgage Services, Inc., insofar as this

claim is predicated upon a violation of RESPA.

2. Ninth Claim, for violation of RESPA, as to Saxon

Mortgage, Inc. and Saxon Mortgage Services, Inc.

The court GRANTS the remainder of the motion. Plaintiffs

agreed to dismiss their Rosenthal Act claim without requesting

leave to amend, and this claim is therefore dismissed with

prejudice. Plaintiffs’ remaining claims are dismissed without

prejudice. Plaintiffs are granted twenty-one (21) days from the

date of this order to file an amended complaint. 

IT IS SO ORDERED.

DATED: February 12, 2010.

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