(PS) Flores v. Wells Fargo Bank, N.A. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ANTHONY R. FLORES, No. 2:20-cv-01162-KJM-CKD PS 12 Plaintiff, 13 v. FINDINGS AND RECOMMENDATIONS ON DEFENDANTS’ MOTION TO DISMISS 14 WELLS FARGO BANK, N.A. et al., (ECF No. 4) 15 Defendants. 16 17 Presently before the court is defendants’1 motion to dismiss. (ECF No. 4.) Plaintiff has 18 filed an opposition, and defendants have filed a reply. (ECF Nos. 9, 11.) Pursuant to Local Rule 19 230(g) the court vacated the hearing on defendants’ motion. For the reasons that follow, the 20 undersigned recommends granting defendants’ motion and dismissing plaintiff’s complaint 21 without leave to amend. 22 BACKGROUND 23 On March 5, 2007 plaintiff obtained a mortgage loan of $153,750 from World Savings 24 Bank secured by property located in Paradise, California (the “Subject Property”). (ECF No. 1 at 25 ¶ 18.) World Savings Bank later changed its name to Wachovia Mortgage, which in turn was 26 acquired by Wells Fargo, N.A. (Id. at ¶¶ 12, 20, 21.) “At some point” during the term of the 27 1 Plaintiff named Wells Fargo, N.A. and the Bank of New York Mellon as defendants in this 28 action. However, the majority of his allegations appear to be centered on Wells Fargo. 1 loan, plaintiff began receiving mortgage statements and requests for payments from Wells Fargo 2 Home Mortgage, which he paid. (Id. ¶ 23.) In November 2018, the Subject Property was 3 destroyed by a forest fire. (Id. at ¶ 24.) In February 2019, plaintiff received insurance proceeds 4 as a result of the fire, which he transferred to Wells Fargo in satisfaction of the note and 5 mortgage. (Id. at ¶ 25.) 6 Plaintiff alleges that prior to Wells Fargo merging with Wachovia Mortgage, plaintiff’s 7 loan was transferred to the “World Savings Mortgage Pass-Through Certificates Series 30 Trust.” 8 (Id. at ¶ 31.) Plaintiff contends that Wells Fargo is not the true beneficiary under the loan, and 9 that “any assignment of a Mortgage/Deed of Trust without proper transfer in an ordinary course 10 of business of the Tangible Note that it secures is a legal nullity by operation of law.” (Id. at ¶ 11 45.) Plaintiff makes similar arguments that the security interest in the Subject Property was not 12 perfected, that there was no “true sale of plaintiff’s tangible note,” and that the transfer was not 13 “duly indorsed.” (Id. at ¶¶ 38, 39, 42.) As a result of these deficiencies, plaintiff asserts that 14 Wells Fargo “improperly and illegally collected payments from Plaintiff on the Property 15 including a payoff as a result of the fire, which they were not entitled to collect.” (Id. at ¶ 54.) 16 LEGAL STANDARDS 17 In considering a motion to dismiss for failure to state a claim upon which relief can be 18 granted, the court must accept as true the allegations of the complaint in question, Erickson v. 19 Pardus, 127 S. Ct. 2197, 2200 (2007), and construe the pleading in the light most favorable to the 20 plaintiff, see Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). 21 In order to avoid dismissal for failure to state a claim a complaint must contain more than 22 “naked assertions,” “labels and conclusions” or “a formulaic recitation of the elements of a cause 23 of action.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-557 (2007). In other words, 24 “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory 25 statements do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Furthermore, a claim 26 upon which the court can grant relief has facial plausibility. Twombly, 550 U.S. at 570. “A 27 claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw 28 the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. 1 at 678. 2 A motion to dismiss pursuant to Rule 12(b)(6) may also challenge a complaint’s 3 compliance with Federal Rule of Civil Procedure 9(b) where fraud is an essential element of a 4 claim. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003). Rule 9(b), 5 which provides a heightened pleading standard, states: “In alleging fraud or mistake, a party must 6 state with particularity the circumstances constituting fraud or mistake. Malice, intent, 7 knowledge, and other conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 8 9(b). These circumstances include the “‘time, place, and specific content of the false 9 representations as well as the identities of the parties to the misrepresentations.’” Swartz v. 10 KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (per curiam) (quoting Edwards v. Marin Park, 11 Inc., 356 F.3d 1058, 1066 (9th Cir. 2004)); see also Kearns v. Ford Motor Co., 567 F.3d 1120, 12 1124 (9th Cir. 2009) (“Averments of fraud must be accompanied by ‘the who, what, when, 13 where, and how’ of the misconduct charged.”). “Rule 9(b) demands that the circumstances 14 constituting the alleged fraud be specific enough to give defendants notice of the particular 15 misconduct . . . so that they can defend against the charge and not just deny that they have done 16 anything wrong.” Kearns, 567 F.3d at 1124. 17 In ruling on a motion to dismiss pursuant to Rule 12(b), the court “may generally consider 18 only allegations contained in the pleadings, exhibits attached to the complaint, and matters 19 properly subject to judicial notice.” Outdoor Media Group, Inc. v. City of Beaumont, 506 F.3d 20 895, 899 (9th Cir. 2007). 21 JUDICIAL NOTICE 22 Defendants request judicial notice of five government documents evincing World Savings 23 Bank, FSB changed its name to Wachovia Mortgage, FSB, and later merged with Wells Fargo, 24 N.A., and one document demonstrating that plaintiff’s loan was modified on August 20, 2013. 25 (ECF No. 5.) 26 Generally, a court may not consider items outside the pleadings when deciding a motion 27 to dismiss, but it may consider items of which it can take judicial notice without converting the 28 motion to dismiss into a motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 1 908 (9th Cir. 2003). A court may take judicial notice of facts “not subject to reasonable dispute” 2 because they are either “(1) generally known within the territorial jurisdiction of the trial court or 3 (2) capable of accurate and ready determination by resort to sources whose accuracy cannot 4 reasonably be questioned.” Fed. R. Evid. 201(b). 5 Regarding the five government documents, this court, and other federal courts, have taken 6 judicial notice of the same, or substantially similar, documents. See Ferguson v. Wells Fargo 7 Bank, N.A., WL 504709, at *2 (E.D. Cal. Feb. 8, 2013) (collecting cases). As to the loan 8 modification agreement, plaintiff himself attached the original loan to his complaint and admits in 9 his opposition that he signed the modification agreement. (ECF No. 9 at 9 (“Plaintiff indeed 10 signed a Loan Modification Agreement in 2013.”).) The court therefore finds that the accuracy of 11 the modification agreement cannot reasonably be questioned. Accordingly, defendants’ request 12 for judicial notice is GRANTED. 13 DISCUSSION 14 Plaintiff’s complaint lists four causes of action: fraudulent misrepresentation, violations of 15 the Fair Debt Collection Practices Act, intentional infliction of emotional distress, and a request 16 for declaratory relief. The court will address these counts in turn. 17 Fraudulent Misrepresentation 18 The elements of fraudulent misrepresentation under California law are: “(1) 19 misrepresentation by way of a false representation, concealment or non-disclosure; (2) knowledge 20 of falsity; (3) intent to defraud; (4) justifiable reliance; and (5) resulting damage.” Green Hills 21 Software, Inc. v. Safeguard Scis. & SPC Private Equity Partners, 33 F. App’x 893, 895 (9th Cir. 22 2002) (quoting Molko v. Holy Spirit Assn., 46 Cal.3d 1092, 1108 (1988)) 23 As the basis of plaintiff’s fraudulent misrepresentation claim, and generally germane to all 24 of plaintiff’s claims, he alleges that Wells Fargo misrepresented that it was a beneficiary under 25 the loan. (ECF 1 at ¶ 61 (“Defendant [Wells Fargo] represented that it was/is the legal holder of 26 the indebtedness and had the right to collect on the loan and in fact collected dollars from Plaintiff 27 and a payoff from Plaintiff when the home on the Property was destroyed by fire.”).) Therefore, 28 if Wells Fargo did in fact have rights under the loan, the representation would not be false and 1 plaintiff’s claim for fraudulent misrepresentation would be foreclosed. 2 As plaintiff notes in his complaint, the original lender for his loan was World Savings 3 Bank, which later changed its name to Wachovia Mortgage, which in turn was acquired by Wells 4 Fargo, N.A. (ECF No. 1 at ¶¶ 12, 20, 21.) Additionally, pursuant to the documents signed by 5 plaintiff and attached to his complaint, plaintiff was bound to World Savings Bank “ITS 6 SUCCESSORS AND/OR ASSIGNEES.” (ECF No. 1 at 21, 28.) Despite plaintiff admitting that 7 Wells Fargo is the successor to World Savings Bank, he alleges that Wells Fargo had no rights 8 under the loan. In support of plaintiff’s theory, he alleges that the subject loan was transferred to 9 a securitized trust in 2007, and that Wells Fargo is not entitled to any beneficial interest under the 10 loan. (See ECF No. 1 at ¶ 17 (“Plaintiff disputes the title and ownership of the Note and 11 Mortgage on the Property . . . in that the originating mortgage lender, and others alleged to claim 12 ownership of Plaintiff’s Promissory Note and/or Mortgage, have unlawfully sold, assigned and/or 13 transferred their ownership and security interest.”).) As further evidence of this theory, plaintiff 14 attaches an affidavit from Joseph R. Esquivel, Jr., a private investigator and purported loan 15 securitization expert, who opines that “the Anthony R Flores Loan is still in the World Savings 16 Mortgage Pass-Through Certificates Series 30 Trust.” (ECF No. 1 at 49.) 17 The court in Hammons v. Wells Fargo Bank, N.A., addressed a nearly identical argument 18 involving the same parties—Wells Fargo and World Savings. There, the court held: 19 Hammons argues Wells Fargo lacked the ability to foreclose simply because he has never seen evidence showing his loan was transferred 20 from World Savings. Even assuming that is true, the deed of trust— which Hammons attached to his complaint—establishes as a factual 21 matter that his argument lacks merit. The deed of trust identifies “World Savings Bank, FSB, its successors and/or assignees” as the 22 lender and beneficiary. The note similarly identifies “World Savings Bank, FSB, a federal savings bank, its successors and/or assignees, 23 or anyone to whom this Note is transferred” as the lender. Wells Fargo is the successor-in-interest to World Savings. Thus, even 24 accepting Hammons' theory, Wells Fargo would possess the contractual right to enforce the note and deed of trust. 25 26 Hammons v. Wells Fargo Bank, N.A., 2015 WL 9258092, at *5 (N.D. Cal. Dec. 18, 2015) 27 (cleaned up). In Hammons, as here, plaintiff’s own complaint as well as the documents he signed 28 and attached to his complaint, demonstrate that Wells Fargo, as the successor of World Savings, 1 was a beneficiary to the disputed loan. Additionally, plaintiff modified his loan with Wells Fargo 2 in 2013 and voluntarily provided Wells Fargo with the payoff funds in 2019, further evidence that 3 plaintiff knew that Wells Fargo was the successor-in-interest to World Savings. Wells Fargo was 4 therefore entitled to the insurance proceeds, and plaintiff’s alleged securitization theory is not 5 viable in the present action. Plaintiff has failed to establish that defendants misrepresented 6 anything, and his own complaint evinces the opposite. Accordingly, plaintiff’s claim of 7 fraudulent misrepresentation is subject to dismissal. 8 Fair Debt Collections Practices Act 9 Plaintiff next alleges that Wells Fargo violated the Fair Debt Collection Practices Act 10 (“FDCPA”) by “misstating the amount and legal status of” the debt. (ECF No. 1 at ¶ 73.) 11 Congress passed the FDCPA in 1977 with the stated purposes of eliminating “abusive 12 debt collection practices,” ensuring “that those debt collectors who refrain from using abusive 13 debt collection practices are not competitively disadvantaged,” and promoting “consistent State 14 action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). In furtherance 15 of these purposes, the FDCPA bans a variety of debt-collection practices and allows individuals 16 to sue offending debt collectors. 17 “Debt collector” as used in the FDCPA 18 means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of 19 which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or 20 asserted to be owed or due another. 21 15 U.S.C. § 1692(a)(6) (emphasis added). 22 Courts have consistently held that creditors, even assignees from the original creditor, are 23 not “debt collectors” under the FDCPA. Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1209 24 (9th Cir. 2013) (affirming dismissal, in part, because plaintiff’s “complaint makes no factual 25 allegations from which we could plausibly infer that Wells Fargo regularly collects debts owed to 26 someone other than Wells Fargo”); De Dios v. Int’l Realty & Investments, 641 F.3d 1071, 1074 27 (9th Cir. 2011) (“[T]he person who originated the debt, such as a creditor to whom the debt was 28 1 originally owed, is not considered a debt collector”); Rowe v. Educ. Credit Mgmt. Corp., 559 2 F.3d 1028, 1031 (9th Cir. 2009) (“[A] ‘creditor’ is not a ‘debt collector’ under the FDCPA.”). 3 As discussed above, the deed of trust gave World Savings and its successors-in-interest a 4 security interest in the property. The 2013 modification reaffirms that Wells Fargo was the 5 rightful beneficiary under the deed. Therefore, Wells Fargo is not a “debt collector” under the 6 FDCPA, as it was a creditor under the agreement. Accordingly, plaintiff’s claim against Wells 7 Fargo premised on the FDCPA fails to state a claim and should therefore be dismissed. 8 Intentional infliction of emotional distress 9 The elements of intentional infliction of emotional distress are “(1) extreme and 10 outrageous conduct by the defendant with the intention of causing, or reckless disregard of the 11 probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme 12 emotional distress; and (3) actual and proximate causation of the emotional distress by 13 defendant’s outrageous conduct.” Simo v. Union of Needletrades, Indus. & Textile Employees, 14 Sw. Dist. Council, 322 F.3d 602, 621–22 (9th Cir. 2003) (quoting Christensen v. Superior Court, 15 54 Cal.3d 868, 903 (1991). 16 However, “[a]n assertion of legal rights in pursuit of one’s own economic interests does 17 not qualify as ‘outrageous’ under this standard.” Yu v. Signet Bank/Virginia, 69 Cal. App. 4th 18 1377, 1398 (1999). Similarly, “an action for intentional infliction of emotional distress exists 19 only where the defendant’s conduct was not privileged. The assertion of an economic interest in 20 good faith is privileged.” Girard v. Ball, 125 Cal. App. 3d 772, 786-787 (1981). 21 Here, as discussed above, Wells Fargo was the proper beneficiary under the loan. Its 22 acceptance of the mortgage payments and payoff funds, to which Wells Fargo was contractually 23 entitled, does not qualify as “outrageous” conduct, as Wells Fargo was simply asserting its legal 24 rights in good faith. Accordingly, plaintiff’s claim for intentional infliction of emotional distress 25 is subject to dismissal. 26 Declaratory relief 27 Finally, plaintiff requests declaratory relief to determine the parties’ rights to the subject 28 property. (ECF No. 1 ¶ 93.) However, this claim is derivative of plaintiff’s claim for fraudulent wOAIe 2 EUV VE OUING IVINS INES MVOC, to POI Oe PY UO MIO 1 | muisrepresentation and plaintiff's loan securitization theory, which was rejected above. 2 | Accordingly, plaintiff's request for declaratory relief must fail. 3 | Leave to amend 4 Having found that plaintiffs complaint should be dismissed, the court must consider 5 | whether plaintiff should be allowed to amend his complaint. See Polich v. Burlington N.., Inc., 6 | 942 F.2d 1467, 1472 (9th Cir. 1991) (holding that dismissal without leave to amend is improper 7 | unless it is clear that the complaint could not be saved by further amendment). Given that 8 | plaintiffs complaint is premised on an invalid securitization theory and an incorrect interpretation 9 | of the FDCPA, the undersigned finds that leave to amend would be futile and therefore 10 | recommends dismissing plaintiff's complaint without leave to amend. 11 | CONCLUSION 12 For the reasons above, the undersigned recommends dismissing plaintiff's complaint in its 13 | entirety, without leave to amend. 14 Accordingly, it is HEREBY RECOMMENDED that: 15 1. Defendants’ motion to dismiss (ECF No. 4) be GRANTED. 16 2. Plaintiff's complaint be DISMISSED, without leave to amend. 17 3. The Clerk of Court be directed to close this case. 18 These findings and recommendations are submitted to the United States District Judge 19 | assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(). Within fourteen days 20 | after being served with these findings and recommendations, any party may file written 21 | objections with the court and serve a copy on all parties. Such a document should be captioned 22 | “Objections to Magistrate Judge’s Findings and Recommendations.” Failure to file objections 23 || within the specified time may waive the right to appeal the District Court’s order. Martinez v. 24 | Yist, 951 F.2d 1153 (9th Cir. 1991). 25 | Dated: September 29, 2020 Ci ide f | fe 26 CAROLYN K DELANEY 7 UNITED STATES MAGISTRATE JUDGE 28 | 16.1162.F&R