Opinion
Case No. 11-6431-SC
06-04-2013
RICHARD SOWINSKI, Plaintiff, v. WELLS FARGO BANK, N.A., and DOES 1-10, Defendants.
ORDER GRANTING IN PART AND
DENYING IN PART MOTION TO
DISMISS THIRD AMENDED
COMPLAINT
I. INTRODUCTION
Plaintiff Richard Sowinski ("Plaintiff") challenges Defendant Wells Fargo Bank, N.A.'s ("Defendant") foreclosure of his residential mortgage and the subsequent trustee sale of his residence. Plaintiff recently filed a third amended complaint, ECF No. 50 ("3AC"), which Defendant now moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), ECF No. 51 ("MTD"). It is the fourth motion to dismiss filed in this case. The last motion to dismiss was granted in part and denied in part. ECF No. 49 ("Feb. 26 Order"). In the motion to dismiss now before the Court, Defendant argues that the 3AC fails to cure the deficiencies previously identified by the Court and also raises new grounds to dismiss claims that were previously left undisturbed. The motion is fully briefed, ECF Nos. 54 ("Opp'n"), 56 ("Reply"), and suitable for determination without oral argument pursuant to Civil Local Rule 7-1(b). For the reasons set forth below, the motion is GRANTED in part and DENIED in part.
Sowinski v. Wells Fargo Bank, N.A., 11-6431-SC, 2013 WL 706825, 2013 U.S. Dist. LEXIS 26330 (N.D. Cal. Feb. 26, 2013).
II. BACKGROUND
As it must on a Rule 12(b)(6) motion to dismiss, the Court takes all well-pleaded factual allegations as true. On February 3, 2006 Plaintiff and his wife, Mary B. Sowinski, borrowed $672,000 from World Savings Bank, FSB ("WSB"). Feb. 26 Order at 2. The loan was secured by a deed of trust recorded against Plaintiff's residence in Walnut Creek, California. Id. According to judicially noticeable correspondence from federal banking regulators, WSB later changed its name to Wachovia Mortgage, FSB, which was subsequently converted to Wells Fargo Bank Southwest, N.A., and then merged into Defendant. Id.
At the time of the loan transaction, Plaintiff was sixty-eight years old and allegedly suffered from "pre-Alzheimers." Id. Plaintiff alleges that he was intentionally misled as to the terms of the loan transaction. Id. Specifically, Plaintiff alleges that: (1) WSB falsely represented that the interest rate on the loan was fixed rather than adjustable; (2) WSB falsely stated Plaintiff's income and the value of the property on the loan application; (3) Plaintiff was not permitted to read the loan documents and, "because of his weakened mental state," he could not have understood them if he had been. 3AC ¶ 9. As a result of these alleged misrepresentations, Plaintiff took out a loan he could not afford. See id. ¶ 15.
In January 2008, Plaintiff contacted Defendant about increases to his monthly loan payments. Id. ¶ 25. One of Wells Fargo's agents offered to assist Plaintiff with a loan modification, and for the next twenty-eight months, Plaintiff submitted and resubmitted loan modification application materials. Id. ¶¶ 25-26. Plaintiff alleges that Wells Fargo never reached a decision on his application. Id. ¶ 26.
On August 18, 2011, a notice of default was recorded with the Contra Costa County Recorder's Office, indicating that Plaintiff was over $46,000 in arrears on his loan. Feb. 26 Order at 3. On December 2, 2011, Plaintiff filed the instant action in California Superior Court, and Defendant timely removed to this Court. Id. On December 12, 2011, a few days after the action was filed, a trustee's sale was conducted, through which Wells Fargo allegedly sold the property to itself at a below-market price. Id. According to the trustee's deed upon sale, the total debt at the time of sale was $763,042.60. Id.
On or about December 13, 2011, Monique Martin met with Plaintiff and his wife at their Walnut Creek residence. 3AC ¶ 29. Martin identified herself as the local agent for Defendant and represented that she was in charge of the foreclosure process. Id. Plaintiff later called a supervisor in Defendant's organization and confirmed Martin's status. Id. Martin offered Plaintiff and his wife $10,000 "cash for keys" if they vacated the property by January 2, 2012. Id.
Plaintiff and his wife later informed Martin that "they had no choice but to accept the offer but would need additional time to move [out]." Id. ¶ 30. Martin agreed that the $10,000 cash-for-keys offer would remain open through January 20, 2012 and that Defendant would only pay Plaintiff and his wife if they vacated the home by that date in "clean broom" condition. Id. Plaintiff accepted the offer and thoroughly cleaned and vacated the property on January 15, 2012. Id. When Plaintiff gave the keys to Martin, she informed him that Defendant had revoked the offer because there was a lawsuit pending. Id. ¶ 31. Defendant's counsel informed Plaintiff's counsel that Defendant would only pay the $10,000 if Plaintiff agreed to dismiss this action with prejudice. Id. Plaintiff refused this offer. Id. Defendant subsequently obtained an unlawful detainer judgment against Plaintiff, destroying Plaintiff's credit rating. Id. ¶ 32.
There have been several rounds of motion practice in connection with Plaintiff's pleading. Defendant's last motion to dismiss was granted in part and denied in part. The Court declined to dismiss Plaintiff's claim for quiet title to the extent that it was not premised on deficiencies in the foreclosure process. Feb. 26 Order at 9. Plaintiff's claim for breach of oral contract, which was brought in connection with the parties cash-for-keys agreement, was dismissed with leave to amend so that Plaintiff could plead the exact terms of the oral contract and Defendant's agent's authority to enter into it. Id. at 11. The Court also dismissed with leave to amend Plaintiff's claim for elder abuse, finding that Plaintiff's allegations were implausible as pled. Id. at 12-13. All other claims were dismissed with prejudice.
Plaintiff's 3AC asserts claims for (1) quiet title, (2) breach of oral contract, and (3) elder abuse. Defendant now moves to dismiss all three claims pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.
III. LEGAL STANDARD
A Rule 12(b)(6) motion to dismiss "tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). "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. 1988). "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 663 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The allegations made in a complaint must be both "sufficiently detailed to give fair notice to the opposing party of the nature of the claim so that the party may effectively defend against it" and "sufficiently plausible" such that "it is not unfair to require the opposing party to be subjected to the expense of discovery." Starr v. Baca, 633 F.3d 1191, 1204 (9th Cir.2011).
IV. DISCUSSION
A. Quiet Title
Despite the fact that the Court left Plaintiff's quiet title claim largely undisturbed in its February 26 Order on Defendant's previous motion to dismiss, Defendant moves to dismiss that claim again. Defendant argues (1) that Plaintiff cannot now attack the validity of the underlying debt because he previously affirmed its validity by agreeing to the alleged cash-for-keys agreement; (2) Plaintiff failed to allege the necessary elements of a claim for quiet title; and (3) pursuant to Rule 12(b)(7), Plaintiff failed to join a necessary party, his wife, who is also a title-holder. Mot. at 1, 3-5.
The Court notes that Defendant's arguments regarding Rule 12(b)(7) and the joinder of Plaintiff's wife are cursory at best. The entirety of Defendant's argument is contained in two short sentences in the introduction to its motion. Defendant does not cite to any law concerning joinder or cite to any judicially noticeable documents showing that Plaintiff's wife was also a title holder.
These arguments were not raised in any of Defendant's three previous motions to dismiss. See ECF Nos. 11, 18, 39. Accordingly, Federal Rule of Civil Procedure 12(g)(2) bars Defendant from raising them now. Rule 12(g)(2) provides: "Except as provided in Rule 12(h)(2) . . . , a party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion." Rule 12(h)(2) provides: "Failure to state a claim upon which relief can be granted to join a person required by Rule 19(b), or to state a legal defense to a claim may be raised" in any Rule 7(a) pleading, by a Rule 12(c) motion, or at trial.
In sum, under Rule 12(g), Defendant was required to consolidate all Rule 12 defenses in a single pre-answer motion to dismiss. Defendant failed to do so with respect to its new arguments concerning Plaintiff's quiet title claim. Accordingly, its motion to dismiss that claim is denied.
B. Breach of Oral Contract
Defendant contends that Plaintiff's breach of oral contract claim remains flawed. First, Defendant asserts that Plaintiff has not articulated Martin's authority to bind Defendant to the cash-for-keys agreement. Mot. at 5. However, Plaintiff has specifically alleged that Martin represented that she was in charge of the foreclosure process and that Plaintiff confirmed this fact with one of Defendant's supervisors. 3AC ¶ 29. Defendant suggests that Plaintiff could not have reasonably believed that Martin had authority because the foreclosure process was complete by the time she made the cash-for-keys offer. Mot at 5-6. Defendant appears to be clutching at straws. If Martin was in charge of the foreclosure of Plaintiff's home, as Defendant's own agents allegedly confirmed, it was reasonable for Plaintiff to believe that she would also have the authority to make arrangements for Defendant to take possession of the property.
Defendant's remaining arguments seek to hold Plaintiff to a curiously high pleading standard. Despite the fact that Plaintiff alleges that he and his wife accepted the cash-for-keys offer sometime around January 15, 2012, see 3AC ¶¶ 29-30, Defendant argues that Plaintiff cannot state a claim because he failed to allege when or how he accepted the offer. Mot. at 6. Defendant also argues that Plaintiff failed to plead that he left the property in "clean broom condition" or relinquished possession of the property, id., in spite of Plaintiff's allegations that he thoroughly cleaned and vacated the property on or around January 15, 2012, 3AC ¶ 30. Plaintiff need not plead every single detail related to the alleged cash-for-keys agreement. He need only plead a plausible claim for relief. See Iqbal, 556 U.S. at 664. The Court finds that Plaintiff has met that burden.
Defendant raises a number of other arguments for the first time in its reply brief. Reply at 4-6. As Plaintiff was not provided an opportunity to respond to these arguments, the Court does not consider them. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) ("[A]n argument raised for the first time in a reply brief, . . . is not an argument that we may consider here.").
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Accordingly, the Court declines to dismiss Plaintiff's claim for breach of an oral contract.
C. Elder Abuse
As pled, Plaintiff's claim for elder abuse is predicated on: (1) the 2006 loan transaction, which Plaintiff claims was unconscionable; (2) the foreclosure process, which allegedly amounted to illegal "double-tracking"; and (3) the cash-for-keys agreement, which was allegedly intended to trick Plaintiff to vacate the property without a fight. The Court has already held that Plaintiff's conclusory double-tracking allegations are insufficient. Feb. 26 Order at 12. Accordingly, that aspect of Plaintiff's claim for elder abuse is DISMISSED WITH PREJUDICE.
Defendant argues that Plaintiff's elder abuse claim is time-barred to the extent that it is predicated on the 2006 loan transaction. Mot. at 6. Plaintiff responds that the statute of limitations is not relevant because his elder abuse claim relates to ongoing conduct over a series of years. Opp'n at 5. Defendant argues that the court should apply the "separate accrual rule," whereby the statute of limitations applies separately to causes of action arising out of distinct injuries or occurrences. Reply at 7 (citing Grimmett v. Brown, 75 F.3d 506, 511 (9th Cir. 1996) (applying the separate accrual rule in the RICO context)). However, Defendant has not cited any California authority applying the separate accrual rule in this context, and thus has failed to meet its burden as the moving party.
Plaintiff also alleges that Defendant violated the elder abuse statute, Cal. Welf. & Inst. Code § 15600 et al., by tricking him into giving up possession of his property by offering the cash-for-keys agreement. Defendant argues that it did not obtain possession of the property through the cash-for-keys agreement, but through an unlawful detainer action, proceedings that Defendant claims are privileged under California law. Mot. at 7. Consistent with his pleading, Plaintiff responds that Defendant took possession of the property before the unlawful detainer judgment was rendered. Opp'n at 6-7. The dispute over when and how Defendant took possession of the property is a factual issue, not amenable for determination on a motion to dismiss.
Defendant also argues that Plaintiff has failed to plead that the abusive conduct alleged was authorized or ratified by an officer, director, or managing agent of Defendant, as required by the elder abuse statute. Mot. at 7 (citing Cal. Welf. & Inst. Code § 15657(c)). The Court finds that it is plausible that an officer, director, or managing agent of Defendant authorized the acts alleged in the complaint. Whether or not the conduct at issue was actually ratified may be determined through discovery and is not appropriate for resolution here.
Accordingly, Plaintiff's claim for elder abuse is DISMISSED WITH PREJUDICE to the extent that it is predicated on the double-tracking allegations in the Complaint. It remains undisturbed in all other respects.
V. CONCLUSION
For the foregoing reasons, Defendant Wells Fargo Bank, N.A.'s motion to dismiss is GRANTED in part and DENIED in part. Plaintiff's elder abuse claim is DISMISSED WITH PREJUDICE to the extent discussed in Section IV.C supra. Plaintiff's other claims remain undisturbed.
IT IS SO ORDERED.
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UNITED STATES DISTRICT JUDGE