Opinion
No. 2:12-cv-2819 TLN DAD PS
12-02-2014
SOFIA CAMPOS -RIEDEL, Plaintiff, v. JP MORGAN CHASE, et al., Defendants.
FINDINGS AND RECOMMENDATIONS
This matter came before the court on July 11, 2014, for hearing of defendants' motions to dismiss. Plaintiff Sofia Campos-Riedel appeared on her own behalf. Attorneys Ian Ross and Julie Corriveau, appeared telephonically on behalf of the defendants. For the reasons set forth below, the undersigned will recommend that defendants' motions to dismiss be granted.
BACKGROUND
Plaintiff commenced this action on October 16, 2012, by filing a complaint in the Placer County Superior Court. (Dkt. No. 1 at 5.) Defendants removed the matter to this court on November 11, 2012, pursuant to 12 U.S.C. § 1452(f). On December 3, 2012, defendants Federal Home Loan Mortgage Corporation ("Freddie Mac"), and JP Morgan Chase, ("Chase"), filed a motion to dismiss, (Dkt. No. 8) and on February 25, 2013, the undersigned granted defendants' motion to dismiss and granted plaintiff leave to file an amended complaint. (Dkt. No. 19.)
Title 12 U.S.C. § 1452(f) provides that "all civil actions to which [Freddie Mac] is a party shall be deemed to arise under the laws of the United States, and the district courts of the United States shall have original jurisdiction of all such actions, without regard to amount or value."
On March 12, 2013, plaintiff filed her first amended complaint. (Dkt. No. 20.) Defendants filed motions to dismiss on March 26, 2013, (Dkt. No. 21), and April 11, 2013. (Dkt. No. 23.) On November 13, 2013, the undersigned granted defendants' motions to dismiss and granted plaintiff further leave to file a second amended complaint. (Dkt. No. 36.)
Plaintiff filed her second amended complaint on December 12, 2013. (Dkt. No. 37.) Defendants filed a motion to dismiss on January 13, 2014. (Dkt. No. 38.) On March 3, 2014, the undersigned granted defendants' motion to dismiss and again granted plaintiff further leave to amend. (Dkt. No. 43.)
On March 24, 2014, plaintiff filed a third amended complaint. (Dkt. No. 44.) Therein, plaintiff alleges, in relevant part, as follows. On December 14, 1993, Donald Riedel purchased the residential property at issue in this action ("subject property") through a mortgage company with a loan provided by defendant Freddie Mac. (Third Am. Compl. (Dkt. No. 44) at 4.) Plaintiff married Donald Riedel on September 17, 1994. (Id.) On August 25, 1996, Donald Riedel deeded the subject property to himself and plaintiff as "Husband and Wife as Joint Tenants" and recorded that document with the Placer County Recorder's Office. (Id.)
Page number citations such as this one are to the page number reflected on the court's CM/ECF system and not to page numbers assigned by the parties.
On October 17, 1997, Donald Riedel filed for marital dissolution and on October 17, 2000, plaintiff "bought out Donald Riedel's interest in the subject property by way of "Interspousal Transfer Grant Deed" as part of the couple's "Marriage Settlement Agreement." (Id. at 4-5.) This document was also recorded with the Placer County Recorder's Office. (Id.) According to the Interspousal Transfer Grant Deed, plaintiff was the sole owner of the subject property. (Id.) Thereafter, plaintiff contacted the mortgage lender, advised that she was now the sole owner of the property and provided all documents necessary to transfer the mortgage on the subject property into her name. (Id. at 5.) All subsequent correspondence, including loan statements, from the mortgage company regarding the subject property was addressed to plaintiff. (Id.) Thereafter, plaintiff paid all monthly mortgage payments, property taxes and insurance on the subject property. (Id.)
In July of 2008, plaintiff "stopped making her monthly mortgage payments for the sole purpose of qualifying for a loan modification . . . ." (Id. at 6.) In September 2008, plaintiff received from the mortgage company an application for a loan modification, which plaintiff completed and returned. (Id.) That same month, the mortgage company was purchased by defendant Chase. (Id.) On December 11, 2008, a Notice of Default and Election to Sell was recorded with the Placer County Recorder's Office. (Id.) The notice, however, was provided to plaintiff's ex-husband Donald Riedel, not to plaintiff. (Id.) On January 28, 2009, defendant Quality substituted in as the trustee. (Id.)
On March 13, 2009, six months after plaintiff submitted her application for a loan modification, she received a second application for a loan modification, this time from defendant Chase. (Id.) Plaintiff was informed by Chase that her first application had been submitted on the wrong form even though it was submitted on the form provided to her by the mortgage company. (Id.) Around this same time a Notice of Trustee's Sale was recorded with the Placer County Recorder's Office. (Id. at 7.) On March 30, 2009, Vicki Thorne, a Chase employee, confirmed receipt of plaintiff's loan modification supplement and informed plaintiff that the trustee sale of the subject property would be postponed. (Id.)
On July 31, 2009, plaintiff "entered into a 'Trial Plan Agreement' with defendant Chase." (Id.) Plaintiff "was assured by Vicki Thorne that . . . during the trial loan modification, any pending trustee sale would be put on hold." (Id.) However, on December 19, 2009, plaintiff received a "Notice of Incomplete Request," dated October 30, 2009, and postmarked December 18, 2009, requesting additional documents from plaintiff within ten days of October 30, 2009. (Id. at 8.)
On December 31, 2009, plaintiff "resubmitted a new loan modification which was faxed by Brian Kulpa, a Chase branch loan manager . . . ." (Id.) That same day, plaintiff "spoke with Chellenne, who informed plaintiff [she] needed to start the process over with updated information" because previously submitted documents were now outdated. (Id.)
In September of 2010, plaintiff contacted the Home Affordable Modification Program ("HAMP"). (Id.) Plaintiff was informed that a HAMP representative would need to speak with Chase in order to confirm certain information. (Id.) However, on a three-way call with the HAMP representative, plaintiff and a representative from Chase, the HAMP representative stated that the call would need to be recorded. (Id. at 9.) The Chase representative objected to the recording of the telephone call and hung up. (Id.)
On April 5, 2010, a Notice of Trustee's Sale was recorded and on January 21, 2011, another Notice of Trustee's Sale was recorded. (Id.) On January 19, 2012, plaintiff's home was sold to Freddie Mac at a Trustee's Sale. (Id.) Plaintiff was not aware of the pending Trustee Sale. On January 20, 2012 defendant Quality Loan Service Corporation ("Quality") "conveyed its interest to defendant Freddie Mac." (Id.) On January 30, 2012, defendant Chase "transferred its beneficial interest to defendant Freddie Mac." (Id.)
Based on these allegations, plaintiff's third amended complaint purports to state claims of promissory estoppel, negligence, fraud and quiet title. Defendant Quality filed a motion to dismiss the third amended complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure on April 22, 2014. (Dkt. No. 45). On April 23, 2014, defendant Chase also filed a motion to dismiss pursuant to Rule 12(b)(6). (Dkt. No. 49.) Plaintiff did not file an opposition or statement of non-opposition to either motion to dismiss.
On July 11, 2014, the matter came before the undersigned for hearing of defendants' motions to dismiss. At that hearing, plaintiff claimed that she had not received copies of defendants' motions and requested time to file an opposition. Plaintiff was granted three weeks to file written opposition to defendants' motions. (Dkt. No. 61.) However, despite being granted additional time to do so, plaintiff failed to file any written opposition to the pending motions to dismiss. Below, the undersigned will address the legal standards applicable to the pending motions and address each of claims set forth in plaintiff's third amended complaint.
STANDARDS
I. Legal Standards Applicable to Motions to Dismiss Pursuant to Rule 12(b)(6)
The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal sufficiency of the complaint. N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). "Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
In determining whether a complaint states a claim on which relief may be granted, the court accepts as true the allegations in the complaint and construes the allegations in the light most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1989). In general, pro se complaints are held to less stringent standards than formal pleadings drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520-21 (1972). However, the court need not assume the truth of legal conclusions cast in the form of factual allegations. United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, "it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555. See also Iqbal, 556 U.S. at 676 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Moreover, it is inappropriate to assume that the plaintiff "can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).
In ruling on a motion to dismiss brought pursuant to Rule 12(b)(6), the court is permitted to consider material which is properly submitted as part of the complaint, documents that are not physically attached to the complaint if their authenticity is not contested and the plaintiff's complaint necessarily relies on them, and matters of public record. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001).
ANALYSIS
I. Promissory Estoppel
"'The elements of promissory estoppel are: (1) a clear promise, (2) reliance, (3) substantial detriment, and (4) damages measured by the extent of the obligation assumed and not performed.'" Quinteros v. Aurora Loan Servs., 740 F.Supp.2d 1163, 1171 (E.D. Cal. 2010) (quoting Poway Royal Mobilehome Owners Ass'n v. City of Poway, 149 Cal.App.4th 1460, 1471 (2007)).
In support of plaintiff's claim for promissory estoppel the third amended complaint alleges as follows. In July 2008, plaintiff was informed that, "to qualify for a permanent loan modification, Plaintiff would have to be behind on her monthly mortgage payments" but that she "would not be foreclosed on if she was behind because she was applying for a loan modification." (Third Am. Compl. (Dkt. No. 44) at 12.) In August 2008, plaintiff "discontinued making her monthly mortgage payments for the purpose of qualifying for a loan modification." (Id.) Plaintiff would not have stopped making her mortgage payment "if not to qualify for a Permanent Loan Modification." (Id.) Plaintiff was given a loan modification and, on July 31, 2009, entered into a "Trial Plan Agreement." (Id. at 13.)
In her third amended complaint plaintiff also alleges that after she entered into the Trial Plan Agreement, she was promised "that during the trial loan modification, any pending trustee sale would be put on hold," and that despite that promise, on January 19, 2012, "while Plaintiff was in a Trial Loan Modification," her home was sold at a Trustee Sale. (Id.) In support of these allegations, plaintiff has attached as an exhibit to her third amended complaint the signature page of a "Home Affordable Modification Trial Period Plan," signed by plaintiff and dated July 30, 2009. (Id. at 21.)
In their motions to dismiss defendants have provided the court with a complete copy of that document. Review of the entire document finds that the Home Affordable Modification "Trial Period Plan" ended on "the earlier of" October 1, 2009 or "termination of this plan . . . . " (Def.'s MTD (Dkt. No. 51) at 21.) Thus, the trial loan modification ended no later than October 1, 2009. According to the third amended complaint, plaintiff's home was not sold until January 19, 2012, over two years after her trial loan modification had ended.
"Documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss." In re Stac Electronics Securities Litigation, 89 F.3d 1399, 1405 (9th Cir. 1996) (quotations and alterations omitted). See also Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) ("A court may consider evidence on which the complaint 'necessarily relies' if: (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion."). Here, plaintiff does not question the authenticity of the complete Home Affordable Modification Trial Period Plan submitted with their motions to dismiss.
In this regard, the third amended complaint fails to allege facts that if proven would establish that plaintiff relied on any promise made by a defendant to her detriment. Accordingly, the undersigned finds that the third amended complaint fails to state a cognizable claim based upon promissory estoppel principles.
II. Negligence
The elements of negligence are "duty, breach of duty, causation, and damages." Marlene F. v. Affiliated Psychiatric Med. Clinic, Inc., 48 Cal.3d 583, 588 (1989). See also McGarvey v. JP Morgan Chase Bank, N.A., No. 2:13-cv-1099 KJM EFB, 2013 WL 5597148, at *7 (E.D. Cal. Oct. 11, 2013) ("Defendant owes plaintiff and those in similar circumstances a duty to exercise ordinary care in the loan modification process."); Garcia v. Ocwen Loan Servicing, LLC, No. C 10-0290 PVT, 2010 WL 1881098, at *4 (N.D. Cal. May 10, 2010) ("Here, by asking Plaintiff to submit supporting documentation, Defendant undertook the activity of processing Plaintiff's loan modification request. Having undertaken that task, it owed Plaintiff a duty to exercise ordinary care in carrying out the task.").
In support of plaintiff's negligence claim, the third amended complaint alleges that the defendants were negligent as evidenced by the fact that they "sold plaintiff's home in foreclosure while plaintiff was in a Trial Loan Modification, notwithstanding promises that any foreclosure proceeding would be put on hold while plaintiff was in a Trial Loan Modification." (Third Am. Compl. (Dkt. No. 44) at 14.) As noted above, however, it is apparent that by its very terms plaintiff's trial loan modification had ended over two years prior to the time plaintiff's home was sold. Plaintiff also alleges that the defendants were negligent in failing to inform her of the pending sale of her home. Specifically, plaintiff alleges that she "was not informed [that the] trustee sale would occur, foreclosing any opportunity Plaintiff would have had to protect her home if not for her ignorance." (Id.)
However, 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. Savings & Loan Assn., 231 Cal.App.3d 1089, 1096 (1991). Here, even if defendant Chase failed to provide plaintiff with notice of the trustee's sale, Chase's involvement in the foreclosure process would not exceed the scope of its conventional role as a mere lender of money. In fact, that "action[]-or inaction[] . . . fall[s] squarely within the class of conduct a lender might take during the default process." Roque v. Wells Fargo Bank N.A., No. 2:14-cv-0040-ODW(SSx), 2014 WL 904191, at *7 (C.D. Cal. Feb. 3, 2014).
The undersigned previously addressed this claim in the November 12, 2013 order dismissing plaintiff's first amended complaint with leave to amend. In that order the court found that plaintiff's negligence claim was barred by res judicata. (Dkt. No. 36 at 8.) In reaching that conclusion, the undersigned took judicial notice of a May 14, 2012 order issued by the Placer County Superior Court in an unlawful detainer action between these same parties in which the state court found that the foreclosure trustee in this matter fully complied with California Civil Code § 2924, et seq., and entering judgment in favor of defendant Freddie Mac. (Id. at 8.)
A court may take judicial notice of its own files and documents filed in other courts. Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir. 2006); Burbank-Glendale-Pasadena Airport Auth. v. City of Burbank, 136 F.3d 1360, 1364 (9th Cir. 1998); Hott v. City of San Jose, 92 F.Supp.2d 996, 998 (N.D. Cal. 2000); see also FED. R. EVID. 201; Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (on a motion to dismiss, court may consider matters of public record); MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986) (on a motion to dismiss, the court may take judicial notice of matters of public record outside the pleadings).
"[A] judgment in unlawful detainer usually has very limited res judicata effect and will not prevent one who is dispossessed from bringing a subsequent action to resolve questions of title." Vella v. Hudgins, 20 Cal.3d 251, 255 (Cal. 1977). There is a limited exception to this rule for subsequent fraud or quiet title suits founded upon allegations of irregularity in a trustee's sale, since those suits are barred as a result of a prior unlawful detainer judgment. Malkoskie v. Option One Mortg. Corp., 188 Cal.App.4th 968, 974 (2010).
Here, plaintiff's claim that she did not receive notice of the trustee's sale is an allegation of irregularity in the trustee's sale. As such, it is barred under the doctrine of res judicata as a result of the prior unlawful detainer judgment. See Hopkins v. Wells Fargo Bank, N.A., No. CIV. 2:13-0444 WBS JFM, 2013 WL 2253837, at *5 (E.D. Cal. May 22, 2013) ("As in Malkoskie, plaintiff's challenges to the validity of the foreclosure sale could have been raised as a defense in the unlawful detainer action. The judgment entered in that action therefore bars all claims by plaintiff in the current case that challenge the propriety of the eviction and foreclosure."); Castle v. Mortgage Electronic Registration Systems, Inc., No. EDCV 11-0583 VAP (DTBx), 2011 WL 3626560, at *7 (C.D. Cal. Aug. 16, 2011) ("The validity of the foreclosure process, trustee's sale, and Fannie Mae's acquisition of the Property were all encompassed by the Unlawful Detainer Action.").
Accordingly, the undersigned finds that plaintiff's third amended complaint also fails to state a cognizable negligence claim.
III. Fraud
In the third amended complaint's fraud claim plaintiff alleges that in "July of 2009, Chase and plaintiff entered into a Trial Loan Modification." (Third Am. Compl. (Dkt. No. 44) at 15) (citing to the signature page of Home Affordable Modification Trial Period Plan). Plaintiff also alleges that she had been informed by Vicki Thorton, "an authorized representative of Chase . . . that any pending foreclosure proceedings would be put on hold during the Trial Loan Modification . . . ." (Id.) Plaintiff claims that she "relied on the misrepresentations that no foreclosure proceedings would proceed while her account was in a trial loan modification . . . . ." (Id.)
However, as noted above, plaintiff's home was not foreclosed upon during the trial loan modification period. In fact, plaintiff's home was not foreclosed upon until over two years after the trial loan modification had expired by its very terms.
Accordingly, the undersigned finds that the third amended complaint fails to state a cognizable fraud claim.
IV. Quiet Title
The third amended complaint "seeks to quiet title against the following claims of the defendants that plaintiff breached her obligations under the terms of the Deed of Trust." (Third Am. Compl. (Dkt. No. 44) at 17.) However, the undersigned previously found that, "to the extent plaintiff's claim for quiet title before this court is based on allegations of irregularity in the trustee's sale, that claim would also barred as a result of the prior unlawful detainer judgment." (Nov. 12, 2013 Order (Dkt. No. 36) at 8-9.)
In addition, the third amended complaint fails to allege tender. "[A] purported quiet title claim is doomed in the absence of a tender of amounts owed." Allen v. U.S. Bank, Nat. Ass'n, No. CV F 13-1527 LJO SMS, 2013 WL 5587389, at *5 (E.D. Cal. Oct. 10, 2013). See also Deerinck v. Heritage Plaza Mortg. Inc., No. 2:11-cv-1735 MCE EFB, 2012 WL 1085520, at *9 (E.D. Cal. Mar. 30, 2012) ("[T]o maintain a quiet title claim, a plaintiff is required to allege tender of the proceeds of the loan at the pleading stage."); Briosos v. Wells Fargo Bank, 737 F.Supp.2d 1018, 1032 (N.D. Cal. 2010) ("In California it is well-settled that a mortgagor cannot quiet his title against the mortgagee without paying the debt secured."); Kelley v. Mortgage Electronic Registration Systems, Inc., 642 F.Supp.2d 1048, 1057 (N.D. Cal. 2009) ("Plaintiff's have not alleged that they . . . have satisfied their obligations under the Deed of Trust. As such, they have not stated a claim to quiet title.").
Accordingly, the undersigned also finds that plaintiff's third amended complaint fails to state a cognizable quiet title claim
FURTHER LEAVE TO AMEND
For the reasons explained above, defendants' motions to dismiss should be granted and plaintiff's third amended complaint dismissed for failure to state a claim upon which relief may be granted. The court has carefully considered whether plaintiff may further amend her complaint to state a claim upon which relief can be granted. "Valid reasons for denying leave to amend include undue delay, bad faith, prejudice, and futility." California Architectural Bldg. Prod. v. Franciscan Ceramics, 818 F.2d 1466, 1472 (9th Cir. 1988). See also Klamath-Lake Pharm. Ass'n v. Klamath Med. Serv. Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983) (holding that while leave to amend shall be freely given, the court does not have to allow futile amendments).
In addition to failing to state a cognizable claim for relief, plaintiff's third amended complaint fails to alleges any facts that would suggest that defendant Quality exceeded its role as a trustee. See Flores v. EMC Mortg. Co., 997 F.Supp.2d 1088, 1127 (E.D. Cal. 2014) ("There is nothing to suggest that NDS exceeded its DOT trustee authority to initiate property foreclosure. As such, NDS is immunized from the complaint's claims, which further fail for the reasons addressed above."); Patel v. Mortgage Electronic Registration Systems, Inc., Case No.: 3:13-cv-1874-KAW, 2013 WL 6512848, at *4 (N.D. Cal. 2013) ("California Civil Code section 2924(b) also insulates a foreclosure trustee from 'liability for any good faith error resulting from reliance on information provided in good faith by the beneficiary regarding the nature and amount of the default'"); Mora v. U.S. Bank N.A., No. 11-6598 SC, 2012 WL 2061629, at *7 (N.D. Cal. June 7, 2012) ("Plaintiffs have pled no facts that could subject NDSC to liability, given that California law shields foreclosure trustees from liability for certain good faith errors.").
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Here, in light of the allegations of her third amended complaint, the legal principles set forth above and plaintiff's inability to successfully state a cognizable claim for relief despite three times being granted leave to amend to attempt to do so, the undersigned finds that granting further leave to amend would be futile in this case. See Chaset v. Fleer/Skybox Int'l, 300 F.3d 1083, 1088 (9th Cir. 2002) (there is no need to prolong the litigation by permitting further amendment where the "basic flaw" in the underlying facts as alleged cannot be cured by amendment); Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1039 (9th Cir. 2002) ("Because any amendment would be futile, there was no need to prolong the litigation by permitting further amendment.").
Accordingly, IT IS HEREBY RECOMMENDED that:
1. Defendant Quality Home Loan Services' April 22, 2014 motion to dismiss (Dkt. No. 45) be granted;
2. Defendant JP Morgan Chase's April 23, 2014 motion to dismiss (Dkt. No. 49) be granted;
3. Plaintiff's March 24, 2014 third amended complaint (Dkt. No. 45) be dismissed without leave to amend; and
4. This action be closed.
These findings and recommendations will be submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen (14) days after being served with these findings and recommendations, plaintiff may file written objections with the court. A document containing objections should be titled "Objections to Magistrate Judge's Findings and Recommendations." Plaintiff is advised that failure to file objections within the specified time may, under certain circumstances, waive the right to appeal the District Court's order. See Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991). Dated: December 2, 2014
/s/_________
DALE A. DROZD
UNITED STATES MAGISTRATE JUDGE
DAD:6
Ddad1\orders.pro se\riedel2819.mtd3.f&rs.docx