Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-04198/USCOURTS-cand-4_09-cv-04198-2/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1601 Truth in Lending

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UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

OAKLAND DIVISION 

ASIF M. QURESHI, 

 Plaintiff, 

 vs. 

COUNTRYWIDE HOME LOANS, INC., 

COUNTRYWIDE BANK, AFB; BANK OF 

AMERICA; RECONSTRUST COMPANY 

AND RECONTRUST COMPANY N.A., 

WHOLLY-OWNED SUBSIDIARIES OF 

BANK OF AMERICA, 

 Defendants. 

Case No: C 09-4198 SBA 

ORDER GRANTING DEFENDANTS’ 

MOTION TO DISMISS

[Docket 8] 

Plaintiff Asif M. Qureshi brings the instant mortgage fraud action against Defendants 

Countrywide Home Loans, Inc. (Countrywide), Countrywide Bank FSB, Bank of America, 

ReconTrust Company, and ReconTrust Company, N.A., following the foreclosure of his home 

in Hayward, California. The parties are presently before the Court on Defendants’ Motion to 

Dismiss, pursuant to the Federal Rules of Civil Procedure 12(b)(6). Docket No. 8. Having 

read and considered the papers filed in connection with this matter, and being fully informed, 

the Court hereby GRANTS the motion for the reasons set forth below. The Court, in its 

discretion, finds this matter suitable for resolution without oral argument. See Fed.R.Civ.P. 

78(b). 

I. BACKGROUND 

A. FACTUAL SUMMARY

The following facts are based on the allegations in the First Amended Complaint, which 

are presumed true for the purposes of this motion. In or about May 2007, an employee of 

Countrywide approached Plaintiff and offered to refinance the existing mortgage on his home 

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with a conventional, 30-year fixed rate loan. Id. ¶¶ 12, 14. To assist him in the refinancing 

process, unspecified Countrywide employees completed the initial loan application on 

Plaintiff’s behalf and asked him to sign the application, without first explaining what he was 

signing or allowing him to review the terms of the loan application. Id. ¶¶ 15, 16. These 

employees also drafted an employment verification letter and instructed Plaintiff to obtain his 

employer’s signature thereon. Id. ¶ 17. 

Plaintiff provided Countrywide with the requested documents, but was then informed 

that his documentation was insufficient to qualify him for the loan. Id. ¶ 18, 19. However, 

Countrywide told Plaintiff that it could qualify him based on his “stated income.” Id. ¶¶ 20-21. 

To that end, Countrywide used one of its “own affiliates” to obtain an allegedly inflated 

property appraisal in order to justify the loan amount. Id. ¶ 26. Thereafter, a Countrywide 

employee brought a single set of the loan documents to Plaintiff’s residence for his signature. 

Id. ¶ 27. The Countrywide representative did not explain the import of the documents Plaintiff 

was being asked to sign nor was provided a copy of these documents. Id. ¶¶ 27-30. Even after 

refinancing transaction had closed, Plaintiff still was not provided with any documentation 

regarding his new mortgage. It was only after repeated demands by Plaintiff that he was 

provided with unsigned copies of the loan documents. Id. ¶ 31. Plaintiff also requested an 

explanation for the adjustable rate mortgage he had agreed to; however, he was “reassured it 

was fine because he could refinance with Countrywide anytime he wanted to.” Id. ¶ 32. 

In 2008, Plaintiff lost his job and fell behind on his mortgage payments. Id. ¶ 34. He 

contacted Countrywide and was told to apply for a loan modification. Id. During this time 

period, Bank of America acquired Countrywide and its subsidiaries. Id. ¶ 35. In or about May 

2009, Plaintiff obtained new employment and thereafter contacted Bank of America. Id. ¶ 36. 

After of months of telephone communications with the bank, Plaintiff obtained counsel to 

assist him with obtaining a loan modification. Id. ¶ 37. Through legal counsel, Plaintiff 

applied for a loan modification under the federal Home Retention Program. Id. ¶ 38. Bank of 

America confirmed receipt of Plaintiffs’ application. Id. ¶ 39. However, the bank never 

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responded to his counsel’s correspondence, and later informed Plaintiff staff that it would not 

respond to his or his attorney’s inquiries. Id. ¶ 41.

Without responding to Plaintiff’s request for a loan modification, Bank of America 

scheduled Plaintiff’s home for a foreclosure sale in order to pressure Plaintiff into agreeing to a 

short sale. Id. ¶ 43. As a result of Plaintiff’s failure to make payments, ReconTrust Company 

and/or ReconTrust Company, N.A., issued a Notice of Default and a Notice of Trustee’s Sale, 

which were recorded in the Alameda County Official Records on February 13, 2009, and May 

19, 2009, respectively. Defs.’ Mot. to at 4. The Trustee’s Sale of the Plaintiff’s home occurred 

on October 21, 2009. Id. 

B. PROCEDURAL HISTORY

On or about August 7, 2009, Plaintiff filed a Complaint against Defendants in the 

Superior Court of the State of California, County of Alameda. The Complaint alleges twelve 

causes of action against Defendants for: (1) Negligent Misrepresentation; (2) Violations of 

California Predatory Lending Law; (3) Violations of Truth in Lending Act; (4) Unfair Business 

Practices; (5) Cancellation of Deeds Procured by Negligent Misrepresentation/Constructive 

Fraud; (6) Reformation; (7) Injunction; (8) To Enjoin Eviction and Foreclosure Activities and 

Declaratory Relief; (9) Appraisal Fraud, Antitrust and Fraud Against All Defendants; 

(10) Breach of Covenant of Good Faith and Fair Dealing; (11) Collection of an Unlawful Debt; 

and (12) Negligent Infliction of Emotional Distress. The Complaint seeks rescission, statutory 

and punitive damages, injunctive relief, cancellation of deed, a judicial declaration of rights 

regarding the property, and recovery of his attorneys’ fees. 

On September 10, 2009, Defendants removed the case to this Court. On September 17, 

2009, Plaintiff filed his First Amended Complaint which, among other changes, added a 

thirteenth cause of action for Fraud (Promise Made Without Intent to Perform). Defendants 

now move to dismiss the First Amended Complaint, pursuant to Rule 12(b)(6), which is 

accompanied by a Request for Judicial Notice (RJN). Plaintiff opposes the motion and objects 

to the RJN. The matter has been fully briefed and is ripe for adjudication. 

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II. LEGAL STANDARD 

A. RULE 12(b)(6) 

Rule 8 of the Federal Rules of Civil Procedure requires that a complaint contain a “short 

and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 

8(a)(2). If a complaint fails to satisfy Rule 8, it “must be dismissed” under Rule 12(b)(6) for 

failure to state a claim upon which relief can be granted. Bell Atl. Corp. v. Twombly, 550 U.S. 

544, 570 (2007). To survive a motion to dismiss, the plaintiff must allege “enough facts to 

state a claim to relief that is plausible on its face.” Id. The pleadings must “give the defendant 

fair notice of what . . . the claim is and the grounds upon which it rests.” Erickson v. Pardus, 

551 U.S. 89, 93 (2007) (internal quotation marks omitted). “[A] plaintiff’s obligation to 

provide the ‘grounds’ of his ‘entitlement 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. 

When considering a motion to dismiss under Rule 12(b)(6), a court must take the 

allegations as true and construe them in the light most favorable to plaintiff. See Leatherman 

v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 164 (1993). 

However, “the tenet that a court must accept as true all of the allegations contained in a 

complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause 

of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, --- U.S. 

---, 129 S.Ct. 1937, 1949-50 (2009). “While legal conclusions can provide the complaint’s 

framework, they must be supported by factual allegations.” Id. at 1950. Those facts must be 

sufficient to push the claims “across the line from conceivable to plausible[.]” Id. at 1951 

(quoting Twombly, 550 U.S. at 557). In the event dismissal is warranted, it is generally 

without prejudice, unless it is clear the complaint cannot be saved by any amendment. See

Sparling v. Daou, 411 F.3d 1006, 1013 (9th Cir. 2005); Gompper v. VISX, Inc., 298 F.3d 893, 

898 (9th Cir. 2002). 

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B. RULE 9(b) 

A Rule 12(b)(6) motion to dismiss may also challenge a complaint’s compliance with 

Rule 9(b), which provides, in relevant part, that “[i]n alleging fraud or mistake, a party must 

state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b); 

Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1103-04 (9th Cir. 2003). Fraud claims and claims 

that “sound in fraud” or are “grounded in fraud” must be pled with particularity. Kearns v. 

Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). To satisfy this burden, plaintiff must 

allege “the who, what, when, where, and how” of the alleged fraudulent conduct, Cooper v. 

Pickett, 137 F.3d 616, 627 (9th Cir. 1997), and “set forth an explanation as to why [a] 

statement or omission complained of was false and misleading,” In re GlenFed, Inc. Sec. Litig., 

42 F.3d 1541, 1548 (9th Cir. 1994) (en banc); see Fecht v. Price Co., 70 F.3d 1078, 1082 (9th 

Cir. 1995). Where multiple defendants are involved, the plaintiff also must identify the role of 

each defendant in the alleged fraudulent scheme. See Swartz v. KPMG LLP, 476 F.3d 756, 

764-65 (9th Cir. 2007). Allegations of fraud cannot be made in information and belief. Moore 

v. Kayport Package Exp., Inc., 885 F.2d 531, 540 (9th Cir. 1989). Failure to comply with Rule 

9(b) when alleging fraud is grounds for dismissal. See Vess, 317 F.3d at 1103. 

III. DISCUSSION 

A. STANDING

As a threshold matter, Defendants argue that any claims challenging their right to 

foreclose on Plaintiff’s home are barred by his failure to allege an ability and willingness to 

tender the loan proceeds. Defs.’ Mot. at 6-7. The Court agrees. “[T]he law is long-established 

that a trustor or his successor must tender the obligation in full as a prerequisite to challenge of 

the foreclosure sale.” U.S. Cold Storage v. Great W. Sav. & Loan Ass’n, 165 Cal.App.3d 

1214, 1222 (1985). “It would be futile to set aside a foreclosure sale on the technical ground 

that notice was improper, if the party making the challenge did not first make full tender and 

thereby establish his ability to purchase the property. Thus, it is sensible to require that a 

trustor, whose default to begin with resulted in the foreclosure, give proof before the sale is set 

aside that he now can redeem the property.” Id. at 1225; accord Karlsen v. American Savings 

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and Loan Assoc., 15 Cal.App.3d 112, 117-18 (1971) (“A valid and viable tender of payment of 

the indebtedness owing is essential to an action to cancel a voidable sale under a deed of 

trust.”); Alicea v. GE Money Bank, 2009 WL 2136969 *3 (N.D. Cal., July 16, 2009) (“When a 

debtor is in default of a home mortgage loan, and a foreclosure is either pending or has taken 

place, the debtor must allege a credible tender of the amount of the secured debt”) (Armstrong, 

J.). 

Plaintiff readily concedes that he has not met the tender requirement, but claims he 

“could not offer tender because Defendants’ actions precluded him from doing so.” Pl.’s 

Opp’n at 7. Though not entirely clear, Plaintiff appears to argue that he should be excused 

from the tender requirement on equitable grounds, ostensibly because of Defendants’ alleged 

misconduct in the loan process. Plaintiff cites no authority to support such an argument, which 

is otherwise directly contrary to the “long-established” rule “that a trustor or his successor must 

tender the obligation in full as a prerequisite to challenge of the foreclosure sale.” U.S. Cold 

Storage, 165 Cal.App.3d at 1222-23; see also Periguerra v. Meridas Capital, Inc., 2010 WL 

395932 at *3 (N.D. Cal., Feb. 1, 2010) (ruling that the failure to comply with the tender 

requirement required dismissal of rescission claim) (Armstrong, J.). 

The Court concludes that Plaintiff’s failure to allege tender precludes his state lawbased claims and federal TILA claim to the extent they seek to challenge the foreclosure. See

Arnolds Mgmt. Corp. v. Eischen, 158 Cal.App.3d 575, 579 (1984) (“A cause of action 

‘implicitly integrated’ with the irregular sale fails unless the trustor can allege and establish a 

valid tender.”). Thus, the Court GRANTS Defendants’ motion to dismiss Plaintiff’s third 

cause of action for violation of the Truth in Lending Act (TILA), fifth cause of action for 

cancellation of deeds, sixth cause of action for reformation, seventh cause of action for 

injunction, eighth cause of action for declaratory relief, and eleventh cause of action for 

unlawful debt, all of which are DISMISSED with leave to amend.1

 1 The California authorities regarding tender do not apply to federal claims. However, 

TILA contains its own tender requirement where rescission is sought as a remedy. 15 U.S.C. 

§ 1635(b). 

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B. NEGLIGENT MISREPRESENTATION

 “The elements of negligent misrepresentation are ‘(1) the misrepresentation of a past or 

existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent 

to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the 

misrepresentation, and (5) resulting damage.’” Nat’l Union Fire Ins. Co. v. Cambridge 

Integrated Servs. Group, Inc., 171 Cal.App.4th 35, 50 (2009) (citation omitted). Here, Plaintiff 

alleges that: “[Defendants] were negligent in representing the facts regarding the true state of 

the promises of [Plaintiff’s] loan. Namely, the defendants represented that the loan 

modification was being processed, that there was nothing to worry about.” FAC ¶ 54. No 

other misrepresentations are alleged in this cause of action. 

Defendants first argue that Plaintiff’s negligent misrepresentation claim should be 

dismissed for failure to meet the heightened pleading requirements of Rule 9(b). Defs.’ Mot. at 

7. Although the Ninth Circuit has not expressly held that a claim of negligent 

misrepresentation must be pled with particularity, it has recognized that “California law 

classifies negligent misrepresentation as a species of fraud[.]” Lorenz v. Sauer, 807 F.2d 1509, 

1511-12 (9th Cir. 1987); Bily v. Arthur Young & Co., 3 Cal.4th 370, 407 (1992) 

(characterizing negligent misrepresentation as “a species of the tort of deceit.”). Likewise, the 

Ninth Circuit has held that Rule 9(b) applies to claims that “sound in fraud” or are “grounded 

in fraud.” Kearns, 567 F.3d at 1125. Thus, the Court agrees that as a “species of fraud,” a 

claim for negligent misrepresentation must be pled with particularity. Given Plaintiff’s 

admitted failure to meet the requirements of Rule 9(b), Plaintiff’s first cause of action for 

negligent misrepresentation is DISMISSED with leave to amend. 

C. CALIFORNIA PREDATORY LENDING LAW

Defendants move to dismiss Plaintiff’s second cause of action under California’s 

Predatory Lending Law. Defs.’ Mot. at 11. Plaintiff acknowledges that this law is inapplicable 

to his loan. Pl.’s Opp’n at 11. As such, Plaintiff’s second claim is DISMISSED without leave 

to amend. 

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D. TILA 

Plaintiff’s third cause of action alleges that Defendants violated the TILA, as 

implemented by Regulation Z, 12 C.F.R. § 226.1, et seq. Plaintiff avers that Defendants 

violated TILA by: (1) falsifying his loan information and/or ignoring his inability to repay the 

loan; (2) charging excessive interest; (3) targeting Plaintiff and other members of the public 

based on “their demographic, race and credit rating” and their lack of financial “savvy”; and 

(4) falsifying his loan application and closing documents. FAC ¶ 62. As relief, Plaintiff seeks, 

inter alia, rescission of the allegedly fraudulent mortgage and damages. FAC ¶¶ 64-67. 

Defendants move for dismissal of this claim on the ground that the conduct alleged by Plaintiff 

is beyond the scope of TILA, that he received all the disclosures and notices required by TILA, 

and that his claim for damages is time-barred. 

1. Scope of TILA 

TILA was designed to protect consumers from the “uninformed use of credit,” 15 

U.S.C. § 1601(a), and “‘to assure a meaningful disclosure of credit terms so that the consumer 

will be able to compare more readily the various credit terms available to him and avoid the 

uninformed use of credit, and to protect the consumer against inaccurate and unfair credit 

billing and credit card practices,’” Hauk v. JP Morgan Chase Bank USA, 552 F.3d 1114, 1118 

(9th Cir. 2009) (quoting 15 U.S.C. § 1601). To that end, TILA grants borrowers the right to 

rescind certain loans if the creditor fails to provide “material disclosures” or written notice of 

the right to cancel the transaction. Id. § 1635(a). Regulation Z, promulgated by the Federal 

Reserve Board, explains that “[t]he term ‘material disclosures’ means the required disclosures 

of the annual percentage rate, the finance charge, the amount financed, the total payments, the 

payment schedule, and the disclosures and limitations referred to in §§ 226.32(c) and (d) and 

226.35(b)(2).” 12 C.F.R. § 226.23(a)(3) n.48. Likewise, the creditor must notify the borrower 

of the right to rescind by providing “two copies of the notice of the right to rescind to each 

consumer entitled to rescind[.]” Id. § 226.23(b)(1). 

In a “consumer credit transaction” in which a lender retains a security interest in a 

borrower’s residence, TILA provides that “the [consumer] shall have the right to rescind the 

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[loan] transaction until midnight of the third business day following the consummation of the 

transaction or the delivery of the information and rescission forms required under this section 

together with a statement containing the material disclosures required under this subchapter, 

whichever is later . . . .” 15 U.S.C. § 1635(a); 12 C.F.R. § 226.23(a)(3). If the lender fails to 

provide a notice of the right to rescind or the disclosures required by TILA, the time limit for 

rescission is extended to “three years after the date of consummation of the transaction or upon 

the sale of the property, whichever occurs first, . . .” 15 U.S.C. § 1635(f); 12 C.F.R. 

§ 226.23(a)(3); see Miguel v. Country Funding Corp., 309 F.3d 1161, 1163 (9th Cir. 2002). In 

addition, the failure to provide these disclosures may give rise to a claim for actual damages 

and/or statutory damages. 15 U.S.C. § 1640(a). 

As noted, Plaintiff has made a number of allegations of misconduct to support his claim 

for rescission and statutory damages under TILA. See FAC ¶¶ 62a-d; 64-67. However, as 

Defendants correctly point out, the only alleged conduct that ostensibly falls within the scope 

of TILA is his allegation that Defendants “failed to provide Qureshi with copies of the loan 

closing documents . . . ; and to otherwise make the required disclosures to Quereshi.” Id.

¶ 62d.2

 In response to this particular allegation, Defendants proffer a copy the TILA disclosure 

statement purportedly signed by Plaintiff, and argue that his signature on the disclosure 

statement establishes that he received all of the disclosures required by TILA. Defs.’ Mot. at 

13; Defs.’ RJN Ex. D. The Court may consider documents that are not attached to the 

pleadings if those documents are referenced therein and their authenticity “has not been 

questioned.” No. 84 Employer-Teamster Joint Council Pension Trust Fund v. Am. W. Holding 

Corp., 20 F.3d 920, 925 n.2 (9th Cir. 2003). In this case, however, Plaintiff takes exception to 

the authenticity of the document proffered by Defendants. Pl.’s Opp’n at 5-6. As such, the 

 2 In his opposition, Plaintiff fails to address any of the other allegations alleged in his 

TILA claim. FAC ¶ 62a-62c. The Court construes his failure to do as an abandonment of 

those claims. See Jenkins v. County of Riverside, 398 F.3d 1093, 1095 n.4 (noting that a party 

abandoned claims not defended in opposition to a motion for summary judgment). Therefore, 

Plaintiff’s TILA claim is dismissed without leave to amend as to those particular allegations. 

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Court cannot, in connection with the instant motion, resolve the question of whether Plaintiff, 

in fact, received all of the disclosures and notices required by TILA. 

2. Statute of Limitations 

Finally, Defendants contend that Plaintiff’s claim for damages under TILA is timebarred. TILA’s one-year statute of limitations for claims for damages commences to run when 

the borrower signs the loan documents. See 15 U.S.C. § 1640(e); Meyer v. Ameriquest 

Mortgage Co., 342 F.3d 899, 902 (9th Cir. 2003); King v. Cal., 784 F.2d 910, 914 (9th Cir. 

1986). In this case, Plaintiff signed loan papers on August 8, 2007, but did not file suit until 

August 7, 2009, almost a year after the statute had expired. Thus, on the face of the amended 

complaint, Plaintiff’s claim is untimely. See Huynh v. Chase Manhattan Bank, 465 F.3d 992, 

997 (9th Cir. 2006) (action may be dismissed based on statute of limitations when “the running 

of the statute is apparent on the face of the complaint.”). 

In his opposition, Plaintiff fails to respond to Defendants’ argument that his TILA claim 

is time-barred, except to note that it “assumes that disclosure was made in a time manner, in a 

proper form and format.” Pl.’s Opp’n at 14. Though not entirely clear, it appears that Plaintiff 

is attempting to invoke the doctrine of equitable tolling or equitable estoppel. See Lukovsky v. 

City and County of San Francisco, 535 F.3d 1044, 1051 (9th Cir. 2008) (distinguishing 

between equitable tolling and estoppel). If so, no facts are alleged in the First Amended 

Complaint to justify application of either doctrine. FAC ¶ 63. As a result, the Court concludes 

that Plaintiff’s claim for damages under TILA is subject to dismissal. 

3. Summary 

Defendants’ motion to dismiss Plaintiff’s third cause of action for violation of TILA is 

GRANTED. First, Plaintiff have not satisfied TILA’s tender requirement, which is a 

prerequisite for rescission. 15 U.S.C. § 1635(b). Second, Plaintiff’s claim for damages under 

TILA is time-barred. Third, Plaintiff’s allegations as set forth in Paragraphs 62a-c do not state 

cognizable claims under TILA. Plaintiff’s TILA claim is DISMISSED with limited leave to 

amend, as set forth above. 

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E. UNFAIR COMPETITION LAW

Plaintiff’s fourth cause of action alleges that Defendants violated California’s Unfair 

Competition Law (UCL), Cal. Bus. & Prof. Code § 17200. FAC ¶¶ 68-71. The UCL makes 

actionable any “unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. 

Code § 17200. “Each prong of the UCL is a separate and distinct theory of liability.” 

Birdsong v. Apple, Inc., 590 F.3d 955, 959 (9th Cir. 2009). “[A]n action based on [the UCL] 

to redress an unlawful business practice ‘borrows’ violations of other laws and treats these 

violations . . . as unlawful practices, independently actionable under section 17200 et seq. and 

subject to the distinct remedies provided thereunder.” Farmers Ins. Exch. v. Super. Court, 

2 Cal.4th 377, 383 (1992) (quotations and citations omitted). The heightened pleading 

requirements of Rule 9(b) are applicable to UCL claims. Kearns, 567 F.3d at 1125 (9th Cir. 

2009) (“we have specifically ruled that Rule 9(b)’s heightened pleading standards apply to 

claims for violations of the CLRA and UCL.”).3

Plaintiff’s UCL claim alleges that “Defendants committed unlawful, unfair and/or 

fraudulent business practices as defined by Business and Professions Code Section 17200, by 

engaging in the unlawful, unfair and fraudulent business practices alleged herein.” FAC ¶ 69. 

The amended complaint fails to identify which prongs of the UCL form the basis of this claim 

and fails to allege any particular facts in support thereof. Nor is there effort by Plaintiff to 

differentiate between the conduct of the various defendants or how Plaintiff was harmed by 

such actions. These vague and conclusory allegations are precisely the type of “unadorned, 

the-defendant-unlawfully-harmed-me accusation” that the Supreme Court has held is 

 3 To the extent Plaintiff is relying on the fraudulent prong of the UCL, Plaintiff must 

also allege reliance. In re Tobacco II Cases, 46 Cal.4th 298, 328 (2009); Cattie v. Wal-Mart 

Stores, Inc., 504 F.Supp.2d 939, 947-49 (S.D. Cal. 2007). 

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impermissible. See Iqbal, 129 S.Ct. at 1949. Plaintiff’s UCL claim is DISMISSED with leave 

to amend to rectify these deficiencies.4

F. CANCELLATION OF DEED

Plaintiff’s fifth cause of action to cancel the trustee’s deed is alleged against all 

Defendants based on their allegedly “false representations and fraudulent actions . . . .” Id.

¶ 78. A request to cancel a trustee’s deed is a request for a remedy as opposed to an 

independent cause of action. See Porter v. Super. Court, 73 Cal.App.3d 793, 799 (1977). To 

the extent that Plaintiff’s this claim is in actuality a cause of action for fraud or constructive 

fraud in which Plaintiff seeks cancellation of the deed of trust as a remedy, it fails to properly 

allege the elements of fraud with particularity. 

The elements of a fraud claim are: (1) misrepresentation; (2) knowledge of falsity; 

(3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage. 

Bily, 3 Cal.4th at 407-408. To state a claim for constructive fraud, the plaintiff must allege 

facts establishing: (1) a fiduciary or confidential relationship; (2) nondisclosure; (3) intent to 

deceive; and (4) reliance and resulting injury, i.e., causation. Cal.Civ.Code § 1573; Younan v. 

Equifax Inc., 111 Cal.App.3d 498, 516 n.14 (1980). Plaintiff’s allegations in support of this 

cause of action are conclusory and fail to allege each of these elements with the level of 

particularity demanded by Rule 9(b). Kearns, 567 F.3d at 1125. In addition, Plaintiff has 

failed to allege facts sufficient to demonstrate the existence of a fiduciary duty between himself 

and Defendants, which is a prerequisite for constructive fraud. See Nymark v. Heart Fed. 

Savings & Loan Assn., 231 Cal.App.3d 1089, 1096 (1991) (lender owes no fiduciary duty to 

the borrower); Wagner v. Benson, 101 Cal.App.3d 27, 35 (1980) (lender “owes no duty of care 

to the [borrower] in approving [a] loan.”). Thus, the Court DISMISSES Plaintiff’s fifth cause 

of action with leave to amend. 

 4 In passing, Defendants argue that Plaintiffs’ UCL claim, insofar as it is based on TILA 

violations, is preempted by Home Owner’s Loan Act. They further argue that Plaintiff’s UCL 

claim is time-barred. However, Defendants have failed to present any legal analysis or made 

the requisite factual showing to support these arguments. The Court, therefore, declines to 

consider these arguments in connection with the instant motion. 

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G. REFORMATION

Plaintiff’s sixth cause of action seeks reformation of his loan on the basis that it was 

procured through “fraudulent and predatory means.” FAC ¶ 81. “A complaint for the 

reformation of a contract should allege what the real agreement was, what the agreement as 

reduced to writing was, and where the writing fails to embody the real agreement. It is also 

necessary to aver facts showing how the mistake was made, whose mistake it was and what 

brought it about, so that mutuality may appear.” Lane v. Davis, 172 Cal.App.2d 302, 309 

(1959); 5 Witkin, Cal. Proc., Pleading, § 807 at 222-23 (8th ed. 2008). Plaintiff’s claim for 

reformation contains none of these allegations nor does it comport with the heightened 

pleading requirements of Rule 9(b). See Vess, 317 F.3d at 1103-104 (allegations of mistake 

subject to Rule 9(b)). Given these pleading deficiencies, the Court DISMISSES Plaintiff’s 

sixth cause of action with leave to amend. 

H. INJUNCTION AND REQUEST TO ENJOIN EVICTION

Plaintiff’s seventh cause of action is for injunctive relief, and his eighth cause of action 

is to enjoin his eviction and Defendants’ foreclosure activities. FAC ¶¶ 82-90. Plaintiff 

concedes that both of these claims are remedies and do not present an independent, substantive 

legal claim for relief. Pl.’s Opp’n at 19. As such, the Court DISMISSES Plaintiff’s seventh 

and eighth claims without prejudice to seeking such relief in connection with other, 

independently viable claims for relief. 

I. APPRAISAL FRAUD/FRAUD/ANTITRUST

Plaintiff’s ninth cause of action is styled as, “APPRAISAL FRAUD, ANTITRUST 

AND FRAUD AGAINST ALL DEFENDANTS.” Plaintiff alleges that unspecified 

Defendants utilized an appraiser to artificially inflate the value of Plaintiff’s property in order 

to obtain approval of the loan by Countrywide. FAC ¶¶ 91-100. Plaintiff does not identify the 

appraiser, but asserts that he or she worked for “a combination of interrelated companies” 

ostensibly owned by Countrywide. Id. ¶ 92. This alleged interrelationship apparently forms 

the basis of Plaintiff’s fraud/antitrust claims. However, because fraud and antitrust are separate 

claims, the Court analyzes each independently. 

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1. Fraud 

Defendants argue that they cannot be held liable for fraud because an appraisal is 

prepared solely for the benefit of the lender, and therefore, they owe no duty to Plaintiff with 

respect to the appraisal. Defs.’ Mot. at 19. That argument misses the point. Plaintiff is not 

asserting that Defendants procured the appraisal for his benefit. Rather, the crux of this claim 

is that Defendants, through their control of a related entity, obtained an appraisal that 

artificially inflated the value of Plaintiff’s property in order to “qualify” him for a loan that 

they knew he was not qualified for or had the ability to repay the note. Thus, whether or not 

the appraiser or Defendants directly owed Plaintiff any duties regarding the appraisal is entirely 

beside the point. That being said, Plaintiff’s fraud claim is alleged in a far too conclusory 

manner to pass muster under Rule 9(b). Plaintiff must allege fact in support of each element of 

fraud, and must specifically identify the role of each Defendant in allegedly perpetrating such 

fraud. Thus, the Court DISMISSES Plaintiff’s ninth cause of action to the extent that it seeks 

to allege a claim for fraud, with leave to amend.5

 

2. Antitrust 

To the extent that Plaintiff is attempting to allege a separate claim for violation of the 

Sherman Antitrust Act, such claim fails as well. “In order successfully to allege a violation of 

§ 1 of the Sherman Antitrust Act, a plaintiff must allege sufficient facts to demonstrate three 

elements: (1) the existence of a contract, combination, or conspiracy among two or more 

separate entities that (2) unreasonably restrains (3) interstate trade or commerce.” Columbia 

River People’s Utility Dist. v. Portland Gen. Elec. Co., 217 F.3d 1187, 1189-90 (9th Cir. 2000) 

(footnote omitted). No facts are alleged are in the First Amended Complaint with respect to 

any of these elements. Nor does Plaintiff oppose the dismissal of his ninth claim insofar as it is 

 5 The Court also notes that Plaintiff’s opposition attempts to expand the scope of his 

appraisal fraud claim by relying on allegations not contained in the amended complaint. The 

Court cannot consider new facts not alleged in the complaint, but asserted in plaintiff’s 

opposition papers, in ruling on a motion to dismiss pursuant to Rule 12(b)(6). See Schneider v. 

Calif. Dep’t of Corrections, 151 F.3d 1194, 1197 n.1 (9th Cir. 1998) (“In determining the 

propriety of a Rule 12(b)(6) dismissal, a court may not look beyond the complaint to a 

plaintiff's moving papers, such as a memorandum in opposition to a defendant's motion to 

dismiss.”). 

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predicated upon a violation of the Sherman Antitrust Act, thus evincing his intent to abandon 

this claim. See Jenkins, 398 F.3d at 1095 n.4. The Court therefore DISMISSES Plaintiff’s 

ninth claim to the extent that is it predicted on antitrust violations under the Sherman Antitrust 

Act, without leave to amend. 

J. BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING

Plaintiffs’ tenth cause of action is for breach of the implied covenant of good faith and 

fair dealing . This covenant provides that no party to a contract may do anything that would 

deprive another party of the benefits of the contract. Foley v. Interactive Data Corp., 47 Cal.3d 

654, 683-684 (1988). “This covenant is read into contracts in order to protect the express 

covenants or promises of the contract, not to protect some general public policy interest not 

directly tied to the contract’s purpose.” Wolf v. Walt Disney Pictures & Television, 162 

Cal.App.4th 1107, 1120 (2008) (internal quotations marks omitted). “The implied covenant of 

good faith and fair dealing rests upon the existence of some specific contractual obligation” 

and there “is no obligation to deal fairly or in good faith absent an existing contract.” Racine & 

Laramie, Ltd. v. Dep’t of Parks & Recreation, 11 Cal.App.4th 1026, 1031-32 (1992) (internal 

quotation marks omitted). 

Here, Plaintiff alleges that Defendants breached the implied covenant of good faith and 

fair dealing by “failing to give proper disclosure (sic) as outlined above, and causing the loan to 

be higher in interest, Defendants have breached the Covenant (sic) of good faith and fair 

dealing.” FAC ¶ 105. Though the amended complaint fails to allege what particular contract 

forms the basis of this claim, Plaintiff states in his opposition that Defendants’ obligations arise 

pursuant to the “trust deed.” Pl.’s Opp’n at 22. However, the conduct that appears to form the 

basis this claim occurred prior to the execution of the trust deed. Pre-contract conduct cannot 

support a claim for breach of the implied covenant of good faith and fair dealing. See McClain 

v. Octagon Plaza, LLC, 159 Cal.App.4th 784, 799 (2008) (alleged misconduct during contract 

negotiations failed to state a claim for breach of the implied covenant of good faith and fair 

dealing). Likewise, Plaintiff fails to specify what benefit he was deprived of by virtue of 

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Defendants’ alleged conduct.6 Given these deficiencies, Plaintiffs’ fourth claim for breach of 

the implied covenant of good faith and fair dealing is DISMISSED with leave to amend. 

K. COLLECTION OF AN UNLAWFUL DEBT

Plaintiff’s eleventh cause of action is styled as “Collection of an Unlawful Debt,” but 

cites to and appears to be based on various provisions of RICO. FAC ¶¶ 106-109. The 

essential elements of a federal RICO cause of action are: “(1) conduct (2) of an enterprise 

(3) through a pattern (4) of racketeering activity (5) causing injury to plaintiffs’ ‘business or 

property.’” Ove v. Gwinn, 264 F.3d 817, 825 (9th Cir. 2001) (quoting 18 U.S.C. § 1964(c)). 

The heightened pleading standards of Rule 9(b) apply to fraud elements of RICO claim. Wagh 

v. Metris Direct, Inc., 363 F.3d 821, 825 (9th Cir. 2003). 

The First Amended Complaint fails to state a claim under RICO. First, Plaintiff has not 

alleged facts to show a pattern of racketeering activity. “To state a RICO claim, one must 

allege a ‘pattern’ of racketeering activity, which requires at least two predicate acts.” Clark v. 

Time Warner Cable, 523 F.3d 1110, 1116 (9th Cir. 2008). Here, the predicate act cited by 

Plaintiff is the collection of an unlawful debt. 18 U.S.C. § 1962(b). To establish that “what 

was collected was an unlawful debt within the meaning of RICO,” a plaintiff must show that 

(1) the debt was unenforceable in whole or in part because of state or federal laws relating to 

usury, (2) the debt was incurred in connection with the business of lending money at a usurious 

rate, and (3) the usurious rate was at least twice the enforceable rate. 18 U.S.C. § 1961(6). 

Plaintiff fails to allege facts sufficient to establish a violation of 18 U.S.C. § 1961(6), let alone 

two or more such violations. 

Second, the amended complaint fails to satisfy the damages requirement for a RICO 

claim. The “plain language” of pertinent RICO provisions requires a plaintiff to “allege facts 

tending to show that he or she was injured by the use or investment of racketeering income.” 

Nugget Hydroelectric, L.P. v. Pacific Gas and Elec. Co., 981 F.2d 429, 437 (9th Cir. 1992). 

 6 In his opposition, Plaintiff again cites other allegedly improper conduct that is not 

alleged in the Complaint. For reasons discussed above, the Court will not consider those 

unpled claims at this time. 

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“To recover under RICO, the individual ‘must show proof of concrete financial loss’ and must 

demonstrate that the racketeering activity proximately caused the loss.” Guerrero v. Gates, 442 

F.3d 697, 707 (9th Cir. 2006) (quoting Chaset v. Fleer/SkyboxInt’t, 300 F.3d 1083,1087 (9th 

Cir. 2002)). “Financial loss alone, however, is insufficient.” Canyon County v. Syngenta 

Seeds, Inc., 519 F.3d 969, 975 (9th Cir.), cert. denied, -- U.S. --,129 S.Ct. 458 (2008). 

“Without a harm to a specific business or property interest—a categorical inquiry typically 

determined by reference to state law—there is no injury to business or property within the 

meaning of RICO.” Diaz v. Gates, 420 F.3d 897, 900 (9th Cir. 2005) (en banc). In the instant 

case, the First Amended Complaint fails to allege any loss, let alone a “concrete financial loss,” 

proximately caused by Defendants. On this ground alone, Plaintiff’s RICO claim fails. See

Canyon County, 519 F.3d at 975-76 (affirming dismissal under Rule 12(b)(6) based on 

plaintiff’s failure to allege a concrete financial loss). Accordingly, the Court DISMISSES 

Plaintiff’s eleventh cause of action with leave to amend. 

L. NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS

Plaintiff’s twelfth cause of action is for negligent infliction of emotional distress. FAC 

¶¶ 110-111. “Negligent infliction of emotional distress is not an independent tort; it is the tort 

of negligence to which the traditional elements of duty, breach of duty, causation, and damages 

apply.” Ess v. Eskaton Props., Inc., 97 Cal.App.4th 120, 126 (2002). 

In the instant case, Defendants contend that they owe no duty to Plaintiff. “[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.” See Nymark, 231 Cal.App.3d at 1096. Plaintiff makes no attempt in his 

opposition to this argument, and instead, merely states that this issue cannot be decided on a 

motion to dismiss because it requires development of a factual record. Pl.’s Opp’n at 23. This 

contention lacks merit. The amended complaint is devoid of any facts that would give rise to a 

duty of care owed by Defendants in the first instance. As such, the Court DISMISSES 

Plaintiff’s twelfth cause of action with leave to amend. 

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M. FRAUD (PROMISE MADE WITH NO INTENT TO PERFORM) 

Plaintiff’s thirteenth and final cause of action for Fraud (Promise Made with No Intent 

to Perform) is alleged against Countrywide only. FAC ¶¶ 112-120. Specifically, Plaintiff 

alleges that Countrywide falsely promised that it would modify his loan, in order to induce him 

to sign the loan documents. Id. ¶¶ 113-115. This claim is based on fraud, and as such, is 

subject to the heightened pleading requirements of Rule 9(b). Kearns, 567 F.3d at 1125. Yet, 

Plaintiff fails to allege when the representation was made, who made them, and any other of 

the required fact to plead a claim for fraud. For this reason, the Court DISMISSES Plaintiff’s 

thirteenth claim with leave to amend.7

IV. CONCLUSION 

For the reasons stated above, 

IT IS HEREBY ORDERED THAT: 

1. Defendants’ motion to dismiss is GRANTED. Plaintiff shall have seven (7) days 

from the date this Order is filed to file a Second Amended Complaint consistent with the 

Court’s rulings, as set forth above. In the event Plaintiff fails to file an amended complaint 

within that time-frame, the dismissal of his claims, as discussed above, will be with prejudice. 

Defendants shall file their response to the Second Amended Complaint no later than fourteen 

(14) days after Plaintiffs file their amended pleading. 

2. The parties shall appear for a telephonic Case Management Conference on April 

15, 2010 at 2:45 p.m. The parties shall meet and confer prior to the conference and shall 

prepare a joint Case Management Conference Statement which shall be filed no later than ten 

(10) days prior to the Case Management Conference that complies with the Standing Order for 

All Judges of the Northern District of California and the Standing Order of this Court. 

Plaintiffs shall be responsible for filing the statement as well as for arranging the conference 

 7 Defendants argue that this claim is moot because Plaintiff refused Countrywide’s offer 

to modify his loan. (Defs.’ Mot. at 23 (citing RJN Exs. I and J.) The “evidence” in support of 

Countrywide’s argument consists of two emails attached to Defendants’ request for judicial 

notice. Such documents are outside the pleadings and cannot be considered in connection with 

a motion to dismiss. 

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call. All parties shall be on the line and shall call (510) 637-3559 at the above indicated date 

and time. 

3. This Order terminates Docket No. 8. 

 IT IS SO ORDERED. 

Dated: March 9, 2010 _______________________________ 

SAUNDRA BROWN ARMSTRONG 

United States District Judge 

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