Errol Locke v. Wells Fargo Bank, N.A. ( 2019 )

O 1 2 3 4 5 6 7 United States District Court 8 Central District of California 9 10 11 PLAINTIFFS IN PRO PER ERROL AND Case No. 2:19-cv-08854-ODW (JPRx) 12 TABATHA LOCKE, ORDER GRANTING DEFENDANT’S 13 Plaintiffs, MOTION TO DISMISS [7] 14 v. 15 WELLS FARGO BANK, N.A. AND 16 AMERICA’S SERVICING COMPANY, 17 Defendants. 18 I. INTRODUCTION 19 Plaintiffs Errol and Tabatha Locke, proceeding pro se, bring this action against 20 various Defendants for multiple claims based on an alleged wrongful foreclosure sale 21 of real property located at 2116 West 77th Street, Los Angeles, California 90047 (the 22 “Subject Property”). (See Notice of Removal (“Removal”) Ex A (“Compl.”) ¶ 1, ECF 23 No. 1.) Defendant Wells Fargo Bank, N.A. (“Wells Fargo”) moves to dismiss 24 Plaintiffs’ Complaint. (Mot. to Dismiss (“Mot.”), ECF No. 7.) 25 For the reasons that follow, the Court GRANTS Defendant’s Motion to 26 Dismiss. 27 28 1 II. BACKGROUND 2 In 2005, Plaintiffs took out a loan in the amount of $340,000 backed by a deed 3 of trust in the Subject Property. (Req. for Judicial Notice Exhibit 2.) In 2008, 4 Plaintiffs fell behind three months of payments. (Compl. ¶ 2.) To make up the missed 5 payments, Plaintiffs entered into multiple “Special Forbearance Programs.” (Compl. 6 ¶ 2.) 7 Plaintiffs allege that representatives of Wells Fargo made promises that once 8 they completed the program their mortgage would be modified through the “Making 9 Home Affordable Act.” (Compl. ¶¶ 2, 4, 5, 14.) However, their loan was not 10 modified despite their alleged success in completing the programs. (Compl. ¶ 2.) 11 Defendants represented that the modification was denied because of Plaintiffs’ income 12 and a broken forbearance agreement. (Compl. ¶¶ 11, 15.) As a result of these 13 circumstances, Plaintiffs faced foreclosure and were escorted from their home on June 14 16, 2010. (Compl. ¶ 3.) 15 In 2018, Plaintiffs requested Wells Fargo to reconsider their decision to 16 foreclose on Plaintiffs’ home, but on November 15, 2018, Wells Fargo reaffirmed their 17 decision. (Compl. ¶ 9.) Plaintiffs believe that Defendants refuse to admit that they 18 wrongfully foreclosed on the Subject Property in retaliation for Plaintiffs’ complaint 19 to the Comptroller of the Currency. (Compl. ¶ 10.) 20 On August 16, 2019, Plaintiffs brought suit in the Superior Court of California 21 and on October 15, 2019, Wells Fargo removed this matter. (See Removal.) 22 III. REQUEST FOR JUDICIAL NOTICE 23 Wells Fargo requests judicial notice of ten documents: Exhibit 1: Interest First 24 Note; Exhibit 2: Deed of Trust; Exhibit 3: Assignment of Deed of Trust; Exhibit 4: 25 Notice of Default; Exhibit 5: Trustee’s Deed Upon Sale; Exhibit 6: Voluntary Chapter 26 Seven Bankruptcy Petition; Exhibit 7: Amended Schedule(s) and/or Statement(s); 27 Exhibit 8: Motion for Relief from Automatic Stay; Exhibit 9: Discharge of Debtor; 28 1 Exhibit 10: Bankruptcy Docket for Voluntary Chapter Seven Bankruptcy Court. (Req. 2 for Judicial Notice 2–3, ECF No. 8.) Plaintiffs do not oppose Wells Fargo’s request. 3 A court is generally limited to the pleadings in ruling on a Rule 12(b)(6) motion 4 but may consider documents incorporated by reference in the complaint or properly 5 subject to judicial notice without converting a motion to dismiss into one for summary 6 judgment. See Lee, 250 F.3d at 688–89. “[A] court may judicially notice a fact that is 7 not subject to reasonable dispute because it: (1) is generally known within the trial 8 court’s territorial jurisdiction; or (2) can be accurately and readily determined from 9 sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). A 10 document may be incorporated by reference where neither party disputes its 11 authenticity and the pleading necessarily relies on the document. See Marder v. 12 Lopez, 450 F.3d 445, 448 (9th Cir. 2006). 13 The Deed of Trust, Assignment of Deed of Trust, Notice of Default and 14 Trustee’s Deed Upon Sale Deed of Trust are proper subjects of judicial notice because 15 they are undisputed public documents recorded by the Los Angeles County 16 Recorder’s Office. See, e.g., Grant v. Aurora Loan Servs., Inc., 736 F. Supp. 2d 1257, 17 1264 (C.D. Cal. 2010) (collecting cases granting judicial notice of documents 18 recorded by the County Recorder’s Office). Accordingly, the Court GRANTS 19 judicial notice of the Deed of Trust, Assignment of Deed of Trust, Notice of Default 20 and Trustee’s Deed Upon Sale Deed of Trust. 21 The Court Docket from the related Bankruptcy Petition and the Order are also 22 proper subjects of judicial notice. See U.S. ex rel Robinson Rancheria Citizens 23 Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992) (stating the court “may 24 take notice of proceedings [and related filings] in other courts, both within and 25 without the federal judicial system, if those proceedings have a direct relation to 26 matters at issue”). Accordingly, the Court GRANTS judicial notice of Exhibits 6–10. 27 The Interest First Note is not a proper subject of judicial notice and the Court 28 therefore DENIES the request. 1 IV. LEGAL STANDARD 2 A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable 3 legal theory or insufficient facts pleaded to support an otherwise cognizable legal 4 theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). To 5 survive a dismissal motion, a complaint need only satisfy the minimal notice pleading 6 requirements of Rule 8(a)(2)—a short and plain statement of the claim. Porter v. 7 Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual “allegations must be enough to 8 raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 9 U.S. 544, 555 (2007). That is, the complaint must “contain sufficient factual matter, 10 accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. 11 Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). 12 The determination of whether a complaint satisfies the plausibility standard is a 13 “context-specific task that requires the reviewing court to draw on its judicial 14 experience and common sense.” Id. at 679. A court is generally limited to the 15 pleadings and must construe all “factual allegations set forth in the complaint . . . as 16 true and . . . in the light most favorable” to the plaintiff. Lee v. City of Los Angeles, 17 250 F.3d 668, 679 (9th Cir. 2001). But a court need not blindly accept conclusory 18 allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. 19 Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Pro se pleadings are to be 20 construed liberally, but a plaintiff must still present factual allegations sufficient to 21 state a plausible claim for relief. See Hebbe v. Pliler, 627 F.3d 338, 341 (9th Cir. 22 2010). A court may not “supply essential elements of the claim that were not initially 23 pled.” Pena v. Gardner, 976 F.2d 469, 471 (9th Cir. 1992). A liberal reading cannot 24 cure the absence of such facts. Ivey v. Bd. of Regents of Univ. Alaska, 673 F.2d 266, 25 268 (9th Cir. 1982). 26 Where a district court grants a motion to dismiss, it should generally provide 27 leave to amend unless it is clear the complaint could not be saved by any amendment. 28 See Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1 1025, 1031 (9th Cir. 2008). Leave to amend may be denied when “the court 2 determines that the allegation of other facts consistent with the challenged pleading 3 could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture 4 Co., 806 F.2d 1393, 1401 (9th Cir. 1986). Thus, leave to amend “is properly 5 denied . . . if amendment would be futile.” Carrico v. City and Cty. of San Francisco, 6 656 F.3d 1002, 1008 (9th Cir. 2011). 7 V. DISCUSSION 8 Plaintiffs present their Complaint in a narrative fashion and fail to identify any 9 causes of action. (See Compl.) From the Complaint, Wells Fargo identifies three 10 theories: “First, [Plaintiffs] seem to be alleging that Wells Fargo promised to modify 11 their loan, but did not honor the promise. Second, they seem to contend that Wells 12 Fargo violated 12 C.F.R. § 1024.41(d) by denying a loan modification based on Net 13 Present Value (NPV), but “failing to provide the plaintiffs with inputs used to 14 calculate eligibility for assistance. Third, they seem to be asserting a claim for 15 fraudulent business practices based on the bank’s failure to modify their loan.” 16 (Mot. 3.) Accordingly, Defendants identify three causes of action: (1) Breach of 17 Contract; (2) Violation of 12 C.F.R. § 1024.41(d)1; and (3) Violation of California’s 18 Unfair Competition Law. Wells Fargo moves to dismiss these claims on the basis 19 that they are: (1) barred by the relevant statute of limitations; (2) barred by judicial 20 estoppel; and (3) devoid of detail and fail to state a claim. (See Mot. 3–14.) The 21 Court addresses each argument in turn. 22 A. Statute of Limitation 23 A claim for breach of a written contract are subject to a four-year statute of 24 limitation. Cal. Civ. Proc. Code §§337, 339. Under the Unfair Competition Law 25 (“UCL”), claims of an unfair business practice are subject to a four-year limitations 26 27 1 Plaintiffs assert that Wells Fargo violated 12 C.F.R. § 1024.41(d); however, the regulation became 28 effective on January 10, 2014. See 12 C.F.R. § 1024.41. Accordingly, Plaintiffs could not have violated the regulation and this cause of action is DISMISSED with prejudice. 1 period, and claims for fraud or violation of a statute are subject to a three-year 2 limitation. Cal. Bus. & Prof. Code § 17208; Cal. Civ. Proc. Code §338. Here, 3 Plaintiffs breach of contract claim and fraudulent business practice claim arise from 4 Wells Fargo’s conduct in 2008. As Plaintiffs filed their Complaint ten years after the 5 facts giving rise to the claims, well-beyond the statute of limitations, the claims are 6 barred but for a reason to toll the statute. 7 1. Equitable Tolling 8 Plaintiffs argue that the statute of limitations should be tolled because they did 9 not discover Wells Fargo’s wrongful foreclosure until Wells Fargo acknowledged that 10 it had wrongfully foreclosed on other homes. (Opp’n 10.) 11 Delayed discovery can toll the statute of limitations when “[a] plaintiff whose 12 complaint shows on its face that his claim would be barred without the benefit of the 13 discovery rule, [ ] specifically plead[s] facts to show (1) the time and manner of 14 discovery and (2) the inability to have made earlier discovery despite reasonable 15 diligence.” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 808 (2005). A 16 California appellate court applied the doctrine to toll the statute of limitations when a 17 real estate broker breached his contract by intentionally concealing defects in the 18 house. William L. Lyon & Assocs., Inc. v. Superior Court, 204 Cal. App. 4th 1294, 19 1309–10 (2012). There, the court specifically found the breach of the contract to be 20 nonobvious. Id. Here, Plaintiffs fail to allege when they discovered the alleged 21 breach and why they could not have discovered the defect earlier. Thus, the Court 22 cannot toll the statute of limitations. 23 Furthermore, Plaintiffs assert that their claims are related to Wells Fargo’s 24 investigation on August 22, 2018, but fail to specify what breach or misrepresentation 25 by Wells Fargo during the 2018 investigation gives rise to their current claims. By 26 requesting a re-evaluation on the mortgage denial in 2010, Plaintiffs do not reset the 27 clock on their claims from the initial transaction. 28 1 Accordingly, Plaintiffs claims are time-barred. The Court GRANTS the 2 motion with leave to amend to the extent that Plaintiffs can raise claims within the 3 statutes of limitation or plead facts to show why earlier discovery was unreasonable. 4 B. Judicial Estoppel 5 Wells Fargo also moves to dismiss the Complaint on the grounds that Plaintiffs 6 may not raise claims not disclosed during its Bankruptcy proceedings. (Mot. 5.) The 7 Ninth Circuit has held that “[i]n the bankruptcy context, a party is judicially estopped 8 from asserting a cause of action not raised in a reorganization plan or otherwise 9 mentioned in the debtor's schedules or disclosures statements.” Hamilton v. State 10 Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir.2001). Judicial estoppel is 11 imposed when the debtor “has knowledge of enough facts to know that a potential 12 cause of action exists during the pendency of the bankruptcy, but fails to amend his 13 schedules or disclosure statements to identify the cause of action as a contingent 14 asset.” Id. at 784 (finding that Hamilton knew of all the material facts surrounding the 15 damage to the house and State Farm’s investigation and denial of his claim at the time 16 he filed his bankruptcy schedules and for many months before pursuing legal action.) 17 As the Court grants the motion on an alternative basis, the Court declines to 18 address whether judicial estoppel applies. However, Plaintiffs are advised to consider 19 the discussion above when filing its amended complaint. 20 21 22 23 24 25 26 27 28 1 IV. CONCLUSION 2 For the foregoing reasons, the Court GRANTS Defendants’ Motion. Plaintiffs 3 | shall have up to and including January 30, 2019, to file their amended complaint. 4 Plaintiffs are advised that the Federal Pro Se Clinic offers free information and 5 | guidance to individuals who are representing themselves in federal civil actions. The 6 || Los Angeles Clinic operates by appointment only. Appointments are available either 7 || by calling the Clinic or by using an internet portal. The Clinic can be reached at (213) 8} 385-2977, ext. 270 or through an internet request at the following site: 9 || http://prose.cacd.uscourts.gov/los-angeles. Clinic staff can respond to many questions 10] with a telephonic appointment or through an email account. It may be more 11 || convenient to email questions or schedule a telephonic appointment. Staff can also 12 schedule an in-person appointment at their location in the Roybal Federal Building 13 | and Courthouse, 255 East Temple Street, Suite 170, Los Angeles, California 90012. 14] Plaintiffs are encouraged to visit the Clinic or otherwise consult with an attorney prior 15 || proceeding in this matter. 16 17 IT IS SO ORDERED. 18 19 December 23, 2019 ss 20 ae » OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 24 25 26 27 28