Loreen Avakian v. Wells Fargo Bank, N.A. ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS OCT 27 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
LOREEN AVAKIAN; JEFFREY GARZA, No. 19-55659
Plaintiffs-Appellants, D.C. No.
2:18-cv-05766-MWF-AGR
v.
WELLS FARGO BANK, N.A., a National MEMORANDUM*
Association; DOES, 1 through 10, inclusive,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Michael W. Fitzgerald, District Judge, Presiding
Argued and Submitted October 13, 2020
Pasadena, California
Before: GOULD and OWENS, Circuit Judges, and KORMAN,** District Judge.
Plaintiff-Appellants Loreen Avakian and Jeffrey Garza (collectively
“Borrowers”) appeal the dismissal of their second amended complaint (“SAC”)
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Edward R. Korman, United States District Judge for
the Eastern District of New York, sitting by designation.
without leave to amend. We have jurisdiction under 28 U.S.C. § 1291, and we
affirm.
Borrowers stopped making their scheduled mortgage payments in April
2016, with a resulting monetary balance due on the mortgage loan. A notice of
default was recorded in October 2016, reflecting $34,642.84 in arrears, followed
by a notice of sale in January 2017. Borrowers submitted a first loan modification
application to their lender, Defendant-Appellee Wells Fargo Bank, N.A.
(“Lender”), which was denied on April 11, 2017. Borrowers submitted a second
application to modify their loan agreement in June 2017. They sent the last
requested documents to Lender on June 28. A foreclosure sale was conducted at
6:30 AM on July 3, although Lender told Borrowers later that day that their second
application was complete.
Borrowers brought eight causes of action under California law against
Lender, alleging misconduct in the foreclosure proceedings and the loan
modification process. The district court successively dismissed their complaint on
September 25, 2018, their first amended complaint on February 26, 2019, and their
SAC on May 10, 2019, all for failure to state a claim. Borrowers appeal the
dismissal of their SAC without leave to amend. We address the various claims of
Borrowers in turn.
First, Borrowers did not state a claim for wrongful foreclosure. Even if
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Lender committed the violations Borrowers allege, these notice violations were
technical. Under California law “mere technical violations of the foreclosure
process will not give rise to a tort claim.” Majd v. Bank of Am., N.A., 243 Cal.
App. 4th 1293, 1307 (Ct. App. 2015) (citation omitted), as modified (Jan. 14,
2016). This rule precludes a claim of wrongful foreclosure, which is in tort.
Second, Borrowers did not state a claim for dual tracking under the
California Homeowner Bill of Rights. Cal. Civ. Code § 2923.6(c). Lender denied
the first application months before the foreclosure sale. Lender did not need to
consider a second loan modification application after denying the first because
Borrowers did not adequately plead that they submitted to Lender documentation
of a material change in their financial situation since their first application. See
Cal. Civ. Code § 2923.6(g).
Third, Borrowers’ claims for unfair business practices, intentional
misrepresentation, fraud, and negligent misrepresentation are all fraud-based
claims, and must meet the heightened pleading requirements of Rule 9(b) of the
Federal Rules of Civil Procedure. See Kearns v. Ford Motor Co., 567 F.3d 1120,
1125 (9th Cir. 2009). Borrowers did not show that Lender’s challenged statements
were false when they were made and did not show how Borrowers could have been
misled by Lender’s statement that their application was complete when the
statement was made after the foreclosure sale had taken place. See In re GlenFed,
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Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994) (en banc) (requiring that the
complaint state “what is false or misleading about a statement, and why it is
false”), superseded by statute on other grounds, Private Securities Litigation
Reform Act of 1995, 15 U.S.C. § 78u–4(b)(1), as recognized in Ronconi v. Larkin,
253 F.3d 423, 429 n.6 (9th Cir. 2001). Borrowers did not state a fraud-based
claim.
Fourth, Borrowers did not state a claim for negligence because they did not
show that Lender owed them a duty in tort. See Nymark v. Heart Fed. Sav. & Loan
Ass’n., 231 Cal. App. 3d 1089, 1096 (Ct. App. 1991). Here, Alvarez v. BAC Home
Loans Servicing, LP does not establish a duty because Borrowers did not plead that
Lender had agreed to consider their second loan modification application before
the foreclosure sale took place. 228 Cal. App. 4th 941, 948 (Ct. App. 2014).
Fifth, Borrowers’ unjust enrichment claim relied on their other claims to
allege that Lender was “unjustly conferred a benefit ‘through mistake, fraud,
coercion, or request.’” See Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762
(9th Cir. 2015) (citation omitted). Because Borrowers’ other causes of action did
not state a claim, this claim also fails.
Finally, the district court did not abuse its discretion by denying leave to
amend. See Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1041
(9th Cir. 2011) (citation omitted). “The district court’s discretion to deny leave to
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amend is particularly broad where plaintiff has previously amended the
complaint.” Sisseton-Wahpeton Sioux Tribe of Lake Traverse Indian Reservation,
N.D. & S.D. v. United States, 90 F.3d 351, 355 (9th Cir. 1996) (citation omitted).
Here, because the district court denied leave to amend after permitting amendment
twice and warning that it would not do so a third time, we cannot say that “the
district court committed clear error of judgment.” See id.
AFFIRMED.
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