Opinion
No. C-10-1658 MMC.
July 19, 2011
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS SECOND AMENDED COMPLAINT; VACATING HEARING
Before the Court is the motion, filed June 15, 2011 by defendants U.S. Bank National Association ("U.S. Bank") and Select Portfolio Servicing, Inc. ("SPS") (collectively, "moving defendants"), to dismiss plaintiff Christie Hollowell's Second Amended Complaint ("SAC"). Plaintiff has filed opposition, titled "Objection." U.S. Bank and SPS did not file a reply. Having read and considered the papers filed in support of and in opposition to the motion, the Court finds the matter suitable for decision on the parties' respective written submissions, VACATES the hearing scheduled for July 22, 2011, and rules as follows:
1. Plaintiff's First Claim, alleged against U.S. Bank and titled "Breach of Contract, is subject to dismissal. Plaintiff has failed to cure the deficiency identified in the Court's April 29, 2011 order dismissing the First Amended Complaint ("FAC"); specifically, plaintiff again fails to allege that she either complied with the contractual provision requiring her to afford defendants the opportunity to cure any asserted breach of the terms of the Deed of Trust prior to filing suit (see Defs.' Req. for Judicial Notice Ex. A § 20), or that she is excused from having to so comply. Additionally, to the extent plaintiff bases the First Claim on a theory that U.S. Bank failed to comply with an "agreement to rescind the loan" (see SAC ¶ 42), said claim fails, as plaintiff alleges that no such agreement was reached (see SAC ¶ 29 (alleging SPS, the loan servicer, "entered into negotiations with [p]laintiff on a loan recession" [sic], but "[t]hese negotiations broke down when [SPS] did not want to complete the contract rescission process by offering a loan modification")).
The first cause of action and certain other causes of action are also alleged against Alliance Bancorp, Inc. ("Alliance"). By order filed February 28, 2011, the Court dismissed plaintiff's claims against Alliance, for failure to timely effectuate service of process.
The moving defendants' unopposed request for judicial notice of the terms of the Deed of Trust is hereby GRANTED.
2. Plaintiff's Second Claim, alleged against U.S. Bank and titled "Breach of Implied Covenant of Good Faith and Fair Dealing," is subject to dismissal. Plaintiff has failed to cure the deficiency identified in the Court's April 29, 2011 order; specifically, plaintiff again fails to allege any facts to support a finding that U.S. Bank frustrated plaintiff's rights to receive a contractual benefit when it assertedly failed to advise her it had purchased the loan from Alliance. See Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 36 (1995) (holding "covenant [of good faith and fair dealing] is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct that frustrates the other party's rights to the benefits of the agreement"). Although plaintiff asserts that her failure to be so informed made it difficult for her to begin negotiations for a loan rescission, the loan agreement does not provide any contractual right to such negotiations. (See Defs.' Req. for Judicial Notice Ex. A.)
3. Plaintiff's Third Claim, alleged against SPS and titled "Rescission of Contract," is subject to dismissal. Plaintiff has failed to cure the deficiency identified in the Court's April 29, 2011 order; specifically, plaintiff again fails to allege any facts to support a finding that a cognizable ground to rescind the loan agreement exists. To the extent plaintiff may be relying on a theory that the initial lender engaged in fraud when it allegedly told her the loan she was offered was a "fixed rate" loan, plaintiff's claim fails, because she is presumed to have read the terms of the loan and, consequently, cannot establish the "necessary element" of "reasonable reliance." See Brown v. Wells Fargo Bank, NA, 168 Cal. App. 4th 938, 958-59 (2008) (holding, where parties to contract do not have fiduciary relationship, plaintiff cannot establish fraud claim based on theory defendant "misrepresented the nature of the contract"; such plaintiff is presumed to have read contract and thus cannot establish reliance on allegedly false statement).
Although SPS, the only defendant named in the Third Claim, is not a party to the loan agreement, the moving defendants have not sought dismissal on such ground.
4. Plaintiff's Fourth Claim, alleged against U.S. Bank and titled "Quiet Title," is subject to dismissal. Plaintiff has failed to cure the deficiency identified in the Court's April 29, 2011 order; specifically, plaintiff again fails to allege any facts to support a finding that U.S. Bank lacks a valid interest in the real property identified in the Deed of Trust. In particular, as discussed above with respect to the third cause of action, plaintiff has not alleged a cognizable basis for rescission of the loan.
5. Plaintiff's Fifth Claim, titled "Fraudulent Misrepresentations," is not asserted against either U.S. Bank or SPS.
The Fifth Claim is asserted only against former defendant Alliance.
6. Plaintiff's Sixth Claim, alleged against U.S. Bank and SPS and titled "Unjust Enrichment," is subject to dismissal. Plaintiff has failed to cure the deficiency identified in the Court's April 29, 2011 order; specifically, although plaintiff now alleges that U.S. Bank and SPS have earned or are likely to earn money from her loan (see SAC ¶¶ 71-73), plaintiff again fails to allege any facts to support a finding that either U.S. Bank or SPS has been or will be unjustly enriched.
7. Plaintiff's Seventh Claim, alleged against U.S. Bank and SPS and titled "Fraudulent Omissions," is subject to dismissal. Plaintiff has failed to cure the deficiencies identified in the Court's April 29, 2011 order; specifically, plaintiff again fails to allege any facts to support a finding that U.S. Bank had a duty to advise plaintiff it had purchased the loan, or that plaintiff suffered any damage as a result of any delay by U.S. Bank or SPS in notifying plaintiff that SPS had become the loan servicer. To the extent plaintiff additionally bases the claim on an allegation that SPS "fraudulently" failed to advise her that U.S. Bank was the lender, the claim fails because plaintiff fails to allege any facts to support a finding that SPS had a duty to so advise plaintiff. See Hahn v. Mirda, 54 Cal. App. 4th 740, 748 (2007) (holding plaintiff, to state viable claim for fraud based on "concealment," must allege defendant was "under a duty to disclose the fact to the plaintiff").
8. Plaintiff's Eighth Claim, alleged against U.S. Bank and SPS and titled "Restitution After Rescission of Credit Transaction," is subject to dismissal. First, as stated above with respect to the Third Claim, plaintiff has failed to allege a cognizable basis for rescission. Second, as the Court stated in its April 29, 2011 order, plaintiff fails to explain how SPS's alleged failure to inform "credit reporting bureaus" that SPS had become the loan servicer and/or that U.S. Bank had become the lender (see SAC ¶ 85) would entitle her to rescind her agreement with U.S. Bank.
9. Plaintiff's Ninth Claim, alleged against SPS and titled "Truth in Lending Act (TILA) Violations," is subject to dismissal, because, as explained in the Court's April 29, 2011 order, the only defendant named thereto, SPS, is a loan servicer (see SAC ¶ 87), and a TILA claim can only be asserted against a "creditor." See 15 U.S.C. § 1640(a) (providing requirements imposed by TILA apply only to "creditor"); 15 U.S.C. § 1641(f)(1) (providing "servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as an assignee of such obligation for purposes of this section unless the servicer is or was the owner of the obligation").
10. Plaintiff's Tenth Claim, alleged against SPS and titled "Real Estate Settlement Procedures Act of 1974 (RESPA) Violations," is subject to dismissal. As the Court stated in its April 29, 2011 order, nothing in RESPA requires notice when a loan is transferred to a new lender, and the Tenth Claim is, again, based on SPS's alleged failure to identify the "actual lender on the loan." (See SAC ¶ 94.)
11. Plaintiff's Eleventh Claim, alleged against U.S. Bank and titled "Violation of Financial Code § 4970 — Regulating Consumer Loans Secured by Real Property," is subject to dismissal. As the Court stated in its April 29, 2011 order, the statute on which plaintiff relies does not require an assignee of a mortgage to provide notice to the mortgagor, and the Eleventh Claim is, again, based on such allegation. (See SAC ¶ 98.) Further, to the extent plaintiff seeks to hold U.S. Bank liable for alleged violations by Alliance and/or under the theory that U.S. Bank had an obligation to cure any violation by Alliance (see SAC ¶¶ 97, 99), the claim fails, for the reason that the section of the Financial Code on which plaintiff relies applies only to an entity that "originates" a loan, see Cal. Fin. Code § 4973(a)(2)(B), and a subsequent assignee cannot be held liable for violations by the originator, see Cal. Fin. Code § 4979.8 ("The provisions of this division shall not impose liability on an assignee that is a holder in due course.").
12. Plaintiff, in her opposition, requests further leave to amend, in an effort to state a claim against U.S. Bank and/or SPS. Plaintiff has failed, however, to identity any new factual allegation(s) she could make as to either U.S. Bank or SPS that would state a cognizable claim against U.S. Bank and/or SPS. Moreover, the Court has already afforded plaintiff two opportunities to amend, and plaintiff, on each occasion, has failed to state any claim against either U.S. Bank or SPS. Under such circumstances, the Court finds further leave to amend, as against U.S. Bank or SPS, is unwarranted. See, e.g., Allen v. City of Beverly Hills, 911 F. 2d 367, 373-74 (9th Cir. 1990) (holding district court did not err in declining to afford plaintiff opportunity to amend, where plaintiff had unsuccessfully attempted to amend to cure deficiencies and failed to identify how further amendment would result in his alleging cognizable claim).