Todd Sharp v. Nationstar Mortgage LLC

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
JUL 05 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
TODD SHARP, MARIA SHARP, No. 15-15066
Plaintiffs - Appellants, D.C. No. 5:14-cv-00831-LHK
v.
MEMORANDUM*
NATIONSTAR MORTGAGE, LLC;
AURORA LOAN SERVICES,
Defendants - Appellees.
Appeal from the United States District Court
for the Northern District of California
Lucy H. Koh, District Judge, Presiding
Argued and Submitted February 13, 2017
San Francisco, California
Before: W. FLETCHER, RAWLINSON, Circuit Judges, and PRATT**, District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Robert W. Pratt, District Judge for the U.S. District
Court for the Southern District of Iowa, sitting by designation.
1
Todd and Maria Sharp (the Sharps) appeal the district court’s order granting
the motion to dismiss filed by defendants Nationstar Mortgage, LLC, (Nationstar)
and Aurora Commercial Corp. (Aurora) pursuant to Fed. R. Civ. P. 12(b)(6).1 The
Sharps assert that the district court’s application of judicial estoppel was an abuse
of discretion.2
We review a district court’s dismissal under Rule 12(b)(6) de novo. See
Mashiri v. Epsten Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017). “We
may affirm on any basis supported by the record, whether or not relied upon by the
district court.” Somers v. Apple, Inc., 729 F.3d 953, 960 (9th Cir. 2013) (citation
omitted).
1. In California, the statute of limitations for fraud is three years from
“the discovery, by the aggrieved party, of the facts constituting the fraud.” Cal.
Civ. Proc. Code § 338(d). The Sharps had notice sufficient to prompt a reasonable
person to inquire regarding any asserted misrepresentation when they received a
letter from Aurora dated November 24, 2010, alerting them to the referral for
foreclosure. See Platt Elec. Supply, Inc. v. EOFF Elec., Inc., 522 F.3d 1049, 1056
1
Although the caption lists Aurora Loan Services as the Defendant, the
parties agree that Aurora Commercial Corp. is the proper defendant.
2
Because we conclude that the Sharps’ claims fail on the merits, we do not
address the district court’s application of judicial estoppel.
2
(9th Cir. 2008) (“It is the discovery of facts, not their legal significance, that starts
the statute.”) (citation and alteration omitted). More than three years elapsed
between the November, 2010, letter and the filing of the initial complaint in
January, 2014, rendering the Sharps’ misrepresentation and conversion claims
time-barred. See id.; see also Cal. Civ. Proc. Code § 338(a).
2. Under California law, there is no independent civil cause of action for
embezzlement; any embezzlement claim is subsumed in a claim for conversion.
See In re Basinger, 45 Cal. 3d 1348, 1363 (1988) (in bank). Because the Sharps’
conversion claim is time-barred, no viable cause of action remains on the purported
embezzlement claim.
3. Neither Aurora nor Nationstar breached a contract with the Sharps by
failing to offer a loan modification or foreclosure alternative after the expiration of
the Workout Agreement. The terms of the Workout Agreement explicitly
established the lender’s discretion to offer a new modification agreement or to
resume foreclosure proceedings absent a new agreement. “If contractual language
is clear and explicit, it governs.” County of San Diego v. Ace Prop. & Cas. Ins.
Co., 37 Cal. 4th 406, 415 (2005) (citations omitted).
4. The Sharps’ claim for breach of the implied covenant is materially
identical to the breach of contract claim. “Where allegations for breach of the
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implied covenant do not go beyond the statement of a mere contract breach and,
relying on the same alleged acts, simply seek the same damages or other relief
already claimed in a companion contract cause of action, they may be disregarded
as superfluous as no additional claim is actually stated. . . .” Shaterian v. Wells
Fargo Bank, N.A., 829 F. Supp. 2d 873, 884 (N.D. Cal. 2011) (citations and
internal quotation marks omitted).
5. When the alleged promises in a claim for promissory estoppel relate to
a loan modification, in California a lack of definitive terms for the loan “renders
the alleged promises insufficiently clear and unambiguous to support a promissory
estoppel.” Daniels v. Select Portfolio Servicing, Inc., 246 Cal. App. 4th 1150,
1179 (2016) (citation omitted). The only document offered by the Sharps in
support of this cause of action is a letter from Aurora that did not include any terms
for a proposed loan modification and did not state in clear, unambiguous terms that
a loan was guaranteed. Because the Sharps did not allege that there were
additional promises subsequent to this letter containing specific terms, they cannot
have reasonably relied upon the contents of the letter as containing a future
promise, and are unable to sufficiently plead a cause of action for promissory
estoppel. See id.4
6. The Sharps’ negligence allegations were not sufficient “to state a
claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citation and internal quotations omitted). “[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. . . .” Nymark v. Heart Fed. Sav. & Loan Ass’n., 231 Cal. App. 3d
1089, 1096 (1991) (citations omitted).
7. After filing three amended complaints, the Sharps nevertheless failed
to plead a viable cause of action for any of their claims. Thus, dismissal of the
action without further leave to amend was warranted. Rich v. Shrader, 823 F.3d
1205, 1209 (9th Cir. 2016) (“[W]hen the district court has already afforded a
plaintiff an opportunity to amend the complaint, it has wide discretion in granting
or refusing leave to amend after the first amendment . . .”) (citations and internal
quotation marks omitted).
AFFIRMED.
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