Ghuman v. Wells Fargo Bank, N.A.
989 F. Supp. 2d 994
E.D. Cal.2013Background
- Plaintiffs signed a $407,600 promissory note and a Deed of Trust naming MERS as original beneficiary to secure the loan on the Subject Property.
- Lender transferred the Note to the Morgan Stanley Mortgage Loan Trust; Wells Fargo acted as Master Servicer for the Trust, while Deutsche Bank was trustee.
- MERS purportedly retained authority to foreclose and assign interests under the Deed of Trust even after the Lender ceased business.
- NDeX recorded a Notice of Default and later a Notice of Trustee’s Sale; Plaintiffs challenge the validity of the Substitution of Trustee and related documents.
- Plaintiffs filed a FAC asserting slander of title, wrongful foreclosure, RESPA, and UCL claims; Wells Fargo moved to dismiss all claims.
- The court grants dismissal with leave to amend, finding deficiencies in falsity for slander of title, premature wrongful foreclosure, and deficiencies in RESPA and 2923.5/UCL theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Slander of title requires falsity; did Plaintiffs plead falsity adequately? | Ghuman | Wells Fargo | Falsity not adequately pleaded; claim dismissed with leave to amend. |
| Wrongful foreclosure viable given no sale occurred? | Ghuman | Wells Fargo | Premature; no foreclosure sale occurred; claim dismissed with leave to amend. |
| RESPA claim viable against servicer for QWR response and damages? | Ghuman | Wells Fargo | RESPA claim dismissed with leave to amend; letter not shown as proper QWR and damages lacking. |
| Section 2923.5 violation proven; must show contact attempts and proper declaration? | Ghuman | Wells Fargo | Claim dismissed with leave to amend; compliance statement need not be by person with personal knowledge. |
| Unfair Competition Law claim based on 2923.5; pleaded facts insufficient? | Ghuman | Wells Fargo and NDeX | UCL claim dismissed with leave to amend. |
Key Cases Cited
- Sumner Hill Homeowners’ Association, Inc. v. Rio Mesa Holdings, LLC, 205 Cal.App.4th 999 (Cal. Ct. App. 2012) (elements of slander of title and recoverable damages include litigation costs to remove doubt on vendibility)
- Seeley v. Seymour, 190 Cal.App.3d 844 (Cal. Ct. App. 1987) (recorded instruments announce status to third parties and may support publication element)
- Barrionuevo v. Chase Bank, 885 F.Supp.2d 964 (N.D. Cal. 2012) (damages include litigation costs; supports pecuniary loss analysis in slander of title)
- Lane v. Vitek Real Estate Industries Group, 713 F.Supp.2d 1092 (E.D. Cal. 2010) (foreclosure statute framework; broad power of trustees and nominees)
- Moeller v. Lien, 25 Cal.App.4th 822 (Cal. Ct. App. 1990) (nonjudicial foreclosure scheme is exhaustive; no added requirements for beneficiary interest)
- Mabry v. Superior Court, 185 Cal.App.4th 208 (Cal. Ct. App. 2010) (contact requirement under 2923.5 does not require actual contact or personal knowledge; due diligence suffices)
- Medrano v. Flagstar Bank, FSB, 704 F.3d 661 (9th Cir. 2012) (RES/SPA requests can be broader; not all servicing inquiries qualify as QWRs)
- Catalan v. GMAC Mortgage Corporation, 629 F.3d 676 (7th Cir. 2011) (any reasonably stated written request for account information can be a QWR)