Kilpatrick v. US Bank, NA, 3:12-cv-01740

In 2006 Kilpatrick and Berglund purchased San Diego property via a loan secured by a recorded deed of trust; FLS allegedly transferred the deed to a trust for which US Bank was trustee and Wells Fargo (dba ASC) serviced the loan; MERS listed as nominee mortgagee.
Plaintiffs fell behind after March 2010; ASC allegedly told them they qualified for a loan modification under HAMP but had to miss two payments first, so Plaintiffs missed two payments in reliance.
ASC sent delinquency and denial letters in 2010–2012; multiple modification requests were denied and Plaintiffs allege repeated misrepresentations and a ‘‘loan modification circus’’ culminating in a trustee’s sale/foreclosure on June 8, 2012.
Plaintiffs filed suit in July 2012 and amended the complaint asserting claims for declaratory relief, negligence, violation of 15 U.S.C. § 1641(g), California Business & Professions Code §§ 17200 & 17500, accounting, and wrongful foreclosure/setting aside trustee’s sale.
Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6); the court evaluated statute of limitations, California’s tender rule, and Rule 9(b) heightened pleading for fraud-based allegations.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 1641(g) claim is timely	Kilpatrick argues equitable tolling until they obtained counsel, so claim timely	Defendants say limitations ran one year after transfer/notice (at latest Oct 8, 2010), so suit filed late	Claim for § 1641(g) is time-barred; dismissed with prejudice
Whether tender is required to challenge foreclosure	Plaintiffs contend exceptions apply (attack on loan validity or offsets), so tender not required	Defendants assert California tender rule requires payment offer to challenge foreclosure	Tender rule applies; Plaintiffs did not allege invalidity of debt, so tender required; court applies rule but proceeds to other grounds
Whether fraud-based claims meet Rule 9(b)	Plaintiffs allege ASC misrepresented modification terms and reliance caused default/foreclosure	Defendants say allegations are vague and do not plead who, when, where, how with particularity	Fraud-based claims (declaratory, negligence to extent grounded in misrepresentation, UCL, accounting, wrongful foreclosure) fail Rule 9(b); dismissed without prejudice for some claims
Leave to amend and disposition of claims	Plaintiffs ask to amend all claims	Defendants oppose amendment of time-barred or previously dismissed claims	§1641(g) claim dismissed with prejudice; fourth and fifth claims (UCL and accounting) previously dismissed and not granted leave; first, second, and sixth claims dismissed without prejudice with leave to amend

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must state a plausible claim)
Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not entitled to assumption of truth)
Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (Rule 9(b) requires who, what, when, where, how for fraud claims)
In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541 (fraud pleadings must provide circumstances of alleged fraud)
Socop-Gonzalez v. I.N.S., 272 F.3d 1176 (equitable tolling standards)
Intengan v. BAC Home Loans Servicing LP, 214 Cal. App. 4th 1047 (California tender rule as precondition to challenging foreclosure)
Onofrio v. Rice, 55 Cal. App. 4th 413 (tender not required when action attacks validity of underlying debt)
Lona v. Citibank, N.A., 202 Cal. App. 4th 89 (discussing scope of tender rule and exceptions)