Martinez v. Wells Fargo Bank, National Association
5:13-cv-05597
N.D. Cal.Apr 17, 2014Background
- In 2007 Pedro Martinez executed a deed of trust for $476,000 to purchase property in Sunnyvale; he later defaulted and a Notice of Default was recorded in October 2012.
- A trustee’s sale was scheduled for August 29, 2013, and ultimately postponed to January 6, 2014.
- Martinez sued Wells Fargo, Wells Fargo Home Mortgage, and NDEX West, LLC alleging seven California-law causes of action: fraud, negligent misrepresentation, HBOR violations (including Civil Code § 2923.5), breach of contract, promissory estoppel, and injunctive relief.
- Wells Fargo moved to dismiss for failure to state claims; Martinez did not file an opposition.
- The court found the complaint deficient as to each cause of action (including heightened pleading failures for fraud), and that documentary evidence and judicially noticed records contradicted key allegations.
- The court granted Wells Fargo’s motion and dismissed all claims without leave to amend; judgment to defendants and case closed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraud and negligent misrepresentation | Defendants promised to postpone the foreclosure to Jan. 2014 while processing a loan modification; that was a misrepresentation inducing reliance and damage | The alleged statement was true (sale was postponed) and plaintiff failed to plead falsity or particularized facts under Rule 9(b) | Claims dismissed: falsity not pled and Rule 9(b) not satisfied; allegations lumped multiple defendants without specifics |
| Promissory estoppel | Defendants promised to postpone sale; Martinez relied to his detriment | Even if promised, postponement was performed so no resulting injury; elements not satisfied | Dismissed: reliance/injury element not pled (no injury from fulfilled promise) |
| Breach of oral bilateral contract | Defendants breached promise to postpone sale and other terms (e.g., plaintiff not to sue) | Defendants performed by postponing the sale; plaintiff may have breached by suing | Dismissed: no breach shown because defendants performed; plaintiff may have failed performance too |
| HBOR and Civil Code § 2923.5 (and related HBOR sections) | Defendants violated HBOR duties (failed contact, failed declarations, denied modification procedures) | Many cited HBOR provisions were not yet effective at the time of the Notice of Default; the Notice of Default contains the required declaration; plaintiff failed to allege required facts (e.g., request for alternatives, application date) | Dismissed: statutory claims fail as pleaded and are contradicted by the recorded Notice of Default; some statutes not retroactive/applicable |
| Injunctive relief | Plaintiff seeks injunction to prevent foreclosure | Defendants contend relief is improper where underlying claims fail | Dismissed: injunctive relief is a remedy, not an independent cause of action; cannot stand alone |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state plausible claim above speculative level)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (court need not accept legal conclusions as factual allegations)
- Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097 (9th Cir. 2008) (complaint must state cognizable legal theory and sufficient facts)
- Semegen v. Weidner, 780 F.2d 727 (9th Cir. 1985) (Rule 9(b) requires particularity in alleging fraud)
- Swartz v. KPMG LLP, 476 F.3d 756 (9th Cir. 2007) (fraud allegations must identify time, place, content and parties)
- Engalla v. Permanente Med. Group, Inc., 15 Cal.4th 951 (1997) (elements of fraud under California law)