Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-00992/USCOURTS-cand-4_15-cv-00992-2/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-(Citizenship)

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JOAN LYNAM,

Plaintiff,

v.

NATIONSTAR MORTGAGE LLC,

Defendant.

Case No. 15-cv-00992-DMR 

ORDER ON MOTION TO DISMISS 

SECOND AMENDED COMPLAINT

Re: Dkt. No. 34

Defendant Nationstar Mortgage LLC (“Nationstar”) moves the court to dismiss Plaintiff 

Joan Lynam’s second amended complaint (Docket No. 32) pursuant to Federal Rule of Civil 

Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. [Docket No. 34.] 

The court held a hearing on the motion on August 27, 2015. For the following reasons, 

Defendant’s motion is granted and Plaintiff’s second amended complaint is dismissed with 

prejudice. 

I. Background

Plaintiff makes the following allegations in her second amended complaint, which the 

court accepts as true for purposes of this motion.1 Plaintiff refinanced her home in June 2005, 

taking out a $359,000 loan secured by a deed of trust on her real property in Fremont, California 

(“the property”). (2d Am. Compl. ¶¶ 8, 9; Def.’s Req. for Judicial Notice (“RJN”)2, Ex. 2 (Deed 

 

1 When reviewing a motion to dismiss for failure to state a claim, the court must “accept as true all 

of the factual allegations contained in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) 

(per curiam) (citation omitted).

2

The court grants Defendant’s request for judicial notice of Exhibits 2-8, the deed of trust and 

other documents recorded in connection with the loan, including the notice of default. They are 

true and correct copies of official public records of the Alameda County Recorder’s Office, and 

their authenticity is capable of accurate and ready determination by resort to sources whose 

accuracy cannot reasonably be questioned. See Fed. R. Evid. 201(b). 

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of Trust).) The deed of trust designates Lynam as the trustor and MERS as the beneficiary. 

MERS assigned the deed of trust to Aurora Loan Services in 2010, which later assigned the deed 

of trust to Defendant. (Deed of Trust; 2d Am. Compl. ¶ 9.)

In 2013, Plaintiff fell behind in her loan payments. On June 21, 2013, the trustee recorded 

a notice of default against the property. (RJN Ex. 6 (Notice of Default).) Plaintiff contacted her 

lender to discuss her options and learned that the amount necessary to reinstate her loan was 

approximately $15,000. Plaintiff alleges that although she eventually would have been able to 

reinstate her loan, she began applying for a loan modification. (2d Am. Compl. ¶ 12.)

In August 2013, Plaintiff submitted a loan modification application to Defendant. She 

alleges that shortly thereafter, she received a response that “she had been approved for a 

modification.” (2d Am. Compl. ¶ 13.) Plaintiff contacted Defendant to accept the offer, but “was 

told that Nationstar would supposedly not honor the offer because Plaintiff was not up to date in 

her mortgage payments.” (Am. Compl. ¶ 13.) Confused, Plaintiff asked for clarification, but was 

told that “while she could no longer accept the modification offer, she could submit another loan 

modification application and could find the application and required documents on Defendant’s 

website.” (2d Am. Compl. ¶ 13.) Sometime in October 2013, Plaintiff submitted a second loan 

modification application. (Am. Compl. ¶ 13.) Plaintiff alleges that “pursuant to Defendant’s own 

website, Plaintiff was required to submit a complete Request for Mortgage Assistance Form, an 

IRS 4506T-EZ, her most recent tax return, a benefits letter or benefits statement regarding public 

assistance received by Plaintiff, and two months of proof of receipt of the benefit.” (2d Am. 

Compl. ¶ 14 (emphasis in original).) Plaintiff “returned all of the requested documents to 

Defendant, which were updated as of October 2013, as required.” (2d Am. Compl. ¶ 14.) 

Plaintiff alleges that this second application “was complete, as it contained all of the essential 

information and documentation which Defendant required.” (2d Am. Compl. ¶ 14.)

A trustee’s sale of the property was set for October 23, 2013. Having failed to receive a 

response to her second loan modification application, Plaintiff contacted Defendant on October 21,

2013. Plaintiff spoke with a female representative, who “acknowledged receipt of Plaintiff’s loan 

modification application but told Plaintiff she was supposedly too late.” (2d Am. Compl. ¶ 15.) 

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Plaintiff alleges that “[a]s [she] had submitted all of required documentation, . . . Plaintiff’s 

application was complete and pending within Nationstar’s system at the time” the representative 

confirmed receipt. (2d Am. Compl. ¶ 15.) Two days later, Defendant sold Plaintiff’s property at 

auction despite the fact that Plaintiff had submitted “a complete loan modification application” for 

which Defendant had made no determination. (2d Am. Compl. ¶ 16.)

On October 30, 2013, Plaintiff received a letter from Defendant stating that it had received 

all of Plaintiff’s application materials and supporting documents “except for (1) a benefits letter, 

despite the fact that Plaintiff had submitted a benefits statement with her application as required, 

and (2) a current lease agreement for rental income, despite the fact that Plaintiff did not have 

rental income as was clearly stated on her Request for Mortgage Assistance Application.” (2d 

Am. Compl. ¶ 18.) Plaintiff alleges that this letter confirmed that her application was complete as 

of the date of the sale “except for documents which were not required by Defendant and which 

were inapplicable to Plaintiff.” (2d Am. Compl. ¶ 18.)

Plaintiff filed a complaint on March 3, 2015. On March 25, 2015, Defendant moved to 

dismiss the complaint. Plaintiff subsequently filed an amended complaint on April 15, 2015. 

[Docket No. 16.] Defendant again moved to dismiss, and on June 19, 2015, the court granted 

Defendant’s motion to dismiss. The court granted Plaintiff leave to amend, instructing Plaintiff to 

plead her best case. [Docket No. 31.] Plaintiff filed a second amended complaint on June 25, 

2015, alleging three claims: 1) violation of California Civil Code section 2923.6; 2) violation of 

California Civil Code section 2923.7; and 3) negligence/negligence per se. 

II. Legal Standard

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in 

the complaint. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). 

When reviewing a motion to dismiss for failure to state a claim, the court must “accept as true all 

of the factual allegations contained in the complaint,” Erickson v. Pardus, 551 U.S. 89, 94 (2007) 

(per curiam) (citation omitted), and may dismiss a claim “only where there is no cognizable legal 

theory” or there is an absence of “sufficient factual matter to state a facially plausible claim to 

relief.” Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (citing 

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Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 

2001)) (quotation marks omitted). A claim has facial plausibility when a 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 (citation omitted). In other words, the facts alleged 

must demonstrate “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. 554, 555 (2007) (citing 

Papasan v. Allain, 478 U.S. 265, 286 (1986)); see Lee v. City of L.A., 250 F.3d 668, 679 (9th Cir. 

2001), overruled on other grounds by Galbraith v. Cty. of Santa Clara, 307 F.3d 1119 (9th Cir. 

2002).

As a general rule, a court may not consider “any material beyond the pleadings” when 

ruling on a Rule 12(b)(6) motion. Lee, 250 F.3d at 688 (citation and quotation marks omitted). 

However, “a court may take judicial notice of ‘matters of public record,’” Id. at 689 (citing Mack 

v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)), and may also consider “documents 

whose contents are alleged in a complaint and whose authenticity no party questions, but which 

are not physically attached to the pleading,” without converting a motion to dismiss under Rule 

12(b)(6) into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 

1994), overruled on other grounds by Galbraith, 307 F.3d at 1124. The court need not accept as 

true allegations that contradict facts which may be judicially noticed. See Mullis v. U.S. Bankr. 

Court, 828 F.2d 1385, 1388 (9th Cir. 1987).

III. Discussion

A. California Civil Code section 2923.6

California Civil Code section 2923.6 prohibits certain entities from pursuing a foreclosure 

sale while a borrower’s loan modification application is pending. This prohibited practice is 

known as dual tracking. Under the statute, “[i]f a borrower submits a complete application for a 

first lien loan modification offered by, or through, the borrower’s mortgage servicer, a mortgage 

servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or 

notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification 

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

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Plaintiff’s dual tracking claim is based on her allegation that Defendant sold her property at 

a trustee’s sale even though she had submitted a “complete application for a modification” prior to 

the sale, and Defendants’ representative had confirmed its receipt. (2d Am. Compl. ¶ 25.) The 

court previously granted Defendant’s motion to dismiss this claim because Plaintiff failed to allege 

facts to support the inference that she submitted a “complete” loan modification application within 

the meaning of the statute. Lynam v. Nationstar Mortg. LLC, No. 15-cv-00992-DMR, 2015 WL 

3863195, at *3 (N.D. Cal. June 19, 2015).

Defendant challenges the sufficiency of Plaintiff’s pleading once again. Section 2923.6(h) 

provides that an application is “deemed ‘complete’ when a borrower has 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) (emphasis added). Plaintiff 

alleges that her application was complete because she submitted all of the documents listed on

Defendant’s website before the sale of the property. These facts are insufficient to support the 

inference that Plaintiff satisfied the statutory definition of a “complete” application, i.e., that she 

submitted “all documents required by the mortgage servicer.” Without more, the court cannot 

determine whether Defendant’s website specified the documents required to initiate a loan 

modification application, or to complete the application. Common sense would point toward the 

former, for the latter would likely be tailored to a particular borrower’s circumstances.

By arguing that her pleading is sufficient, Plaintiff in essence asks the court to find that any

borrower who initiates a loan application by tendering documents listed on a servicer’s website 

has submitted a “complete” application within the meaning of section 2923.6, regardless of 

whether the information is complete and accurate or whether it triggers the servicer’s need for 

further information specific to the borrower. Such a ruling would ignore the plain requirements of 

the statute, that a borrower submit “all documents required by the mortgage servicer.” Notably, 

Plaintiff’s second amended complaint glosses over the additional statutory requirement that the 

borrower submit the complete application “within the reasonable timeframes specified by the 

mortgage servicer.” 

Plaintiff also admits that she subsequently received notification from Defendant that her 

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application was incomplete. Plaintiff pleads that this letter confirmed that her application actually

was complete, because it requested documents “which were inapplicable to Plaintiff,” including a 

benefits letter and a current lease agreement. (2d Am. Compl. ¶ 18.) While it may be Plaintiff’s 

position that the requested documents were not applicable to her and thus not “required by the 

mortgage servicer,” and that therefore her application was “complete” upon its submission, the 

statute dictates that the servicer determines which documents are required, not the borrower. In 

sum, the court finds that Plaintiff has not sufficiently alleged facts to support the inference that she 

submitted a “complete” loan modification application within the meaning of the statute prior to the 

October 23, 2013 sale. Accordingly, Plaintiff’s section 2923.6 claim is dismissed. 

Plaintiff has already been granted leave once to amend this claim, and the court explicitly 

instructed Plaintiff to plead her best case. Lynam, 2015 WL 3863195, at *1, 5. As Plaintiff has 

again failed to adequately plead a section 2923.6 claim, this claim is dismissed with prejudice.

B. California Civil Code section 2923.7

The California legislature has enacted a “single point of contact provision” (“SPOC”) in 

order “to prevent borrowers from being given the run-around.” Rockridge Trust v. Wells Fargo, 

N.A., 985 F. Supp. 2d 1110, 1151 (N.D. Cal. 2013) (citing Jolley v. Chase Home Fin., LLC, 213 

Cal. App. 4th 872, 904-05, (2013)). California Civil Code section 2923.7 provides that “[u]pon 

request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer 

shall promptly establish a single point of contact and provide to the borrower one or more direct 

means of communication with the single point of contact.” Cal. Civ. Code § 2923.7(a). Among 

other things, the SPOC must communicate “the process by which a borrower may apply for an 

available foreclosure prevention alternative” and any associated deadlines; coordinate “receipt of 

all documents associated with available foreclosure prevention alternatives,” including notifying 

the borrower of any missing documents; and “have access to current information and personnel 

sufficient to timely, accurately, and adequately inform the borrower of the current status of the 

foreclosure prevention alternative.” Cal. Civ. Code § 2923.7(b)(1)-(3). Additionally, the SPOC 

must have “access to individuals with the ability and authority to stop foreclosure proceedings 

when necessary.” Cal. Civ. Code § 2923.7(b)(5).

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Plaintiff claims that Defendant violated the SPOC requirement. She alleges that her loan 

application was “complete,” which “warranted a stop to the foreclosure proceedings . . . but that 

on October 21, 2013, the Nationstar representative either had no access to an individual with the 

ability to stop foreclosure proceedings on Plaintiff’s account or failed to inform the individual of 

Plaintiff’s account status which would warrant the stop of foreclosure proceedings.” (2d Am. 

Compl. ¶¶ 32, 33.) The court previously dismissed this claim on the grounds that Plaintiff had not 

sufficiently alleged that a “complete” loan modification was pending as of the date she contacted 

Defendant, and therefore she had not established that she was entitled to have an SPOC put a halt 

to the foreclosure proceedings. As with her amended complaint, Plaintiff’s amended SPOC claim 

rests on her assertion that Defendant violated the prohibition on dual tracking because it went 

forward with the foreclosure sale while her complete modification application was pending. In the 

absence of a properly-pleaded “complete” application, there can be no corresponding violation of 

section 2923.7(b)(5). Accordingly, Plaintiff’s section 2923.7 claim is also dismissed with 

prejudice.

C. Negligence/Negligence Per Se

Plaintiff’s third cause of action alleges that Defendant’s violations of Civil Code sections 

2923.6 and 2923.7 give rise to a cause of action for negligence per se. (2d Am. Compl. ¶¶ 37, 38.) 

Under California law, “[t]he elements of negligence are: (1) defendant’s obligation to 

conform to a certain standard of conduct for the protection of others against unreasonable risks 

(duty); (2) failure to conform to that standard (breach of the duty); (3) a reasonably close 

connection between the defendant’s conduct and resulting injuries (proximate cause); and (4) 

actual loss (damages).” Corales v. Bennett, 567 F.3d 554, 572 (9th Cir. 2009) (quoting McGarry 

v. Sax, 158 Cal. App. 4th 983, 994 (2008)). Negligence per se is an evidentiary presumption that a 

party failed to exercise due care if: (1) it violated a statute, ordinance, or regulation of a public 

entity; (2) the violation proximately caused death or injury to a person or property; (3) the death or 

injury resulted from an occurrence of the nature the statute, ordinance, or regulation was designed 

to prevent; and (4) the person suffering the death or the injury to his or her person or property was 

one of the class of persons for whose protection the statute, ordinance, or regulation was adopted. 

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Cal. Evid. Code § 669. “[T]he doctrine of negligence per se is not a separate cause of action, but 

creates an evidentiary presumption that affects the standard of care in a cause of action for 

negligence.” Millard v. Biosources, Inc., 156 Cal. App. 4th 1338, 1353 n.2 (2007) (emphasis 

added). “[A]n underlying claim of ordinary negligence must be viable before the presumption of 

negligence of Evidence Code section 669 can be employed.” Spencer v. DHI Mortg. Co., Ltd.,

642 F.Supp.2d 1153, 1162 (E.D. Cal. 2009) (citing Cal. Serv. Station & Auto Repair Ass’n v. Am. 

Home Assurance Co., 62 Cal.App. 4th 1166, 1178 (1998)). 

As with her amended complaint, since Plaintiff has failed to adequately allege claims for

violations of sections 2923.6 and 2923.7, she has failed to allege a breach that proximately caused 

any damages. Therefore, Plaintiff’s negligence claim is dismissed with prejudice.

IV. Conclusion

For the foregoing reasons, Defendant’s motion to dismiss is GRANTED. Plaintiff’s 

second amended complaint is dismissed with prejudice.

IT IS SO ORDERED.

Dated: September 17, 2015

______________________________________

Donna M. Ryu

United States Magistrate Judge

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