873 F. Supp. 2d 1179
N.D. Cal.2012Background
- Plaintiff Lisa Plastino borrowed $700,000 in 2006 from Wells Fargo (via World Savings Bank and Wachovia).
- Plaintiff sought a loan modification in Feb. 2011 during the financial downturn, based on alleged future salary increases to $110,000/year.
- Wells Fargo allegedly qualified/planned modification in March 2011 after reviewing 110k vs 85k salary, with assurances no foreclosure during modification.
- Plaintiff provided documentation and was told a modification package would be mailed and that no payments were accepted during the trial modification.
- Defendant later denied modification, and a trustee sale occurred on Aug. 22, 2011; state court unlawful detainer followed, judgment entered Jan. 31, 2012; case removed to federal court where plaintiff sues on five theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| HOLA preemption of claims | Plaintiff argues preemption does not apply to fraud-based claims | Wells Fargo asserts HOLA preempts claims related to mortgage processing and disclosures | The court finds claims are not preempted to the extent they allege fraud; UCL portion preempted regarding certain statutes. |
| Tender requirement | Plaintiff offered to tender the amounts due | Tender must be full and unconditional; mere offer insufficient | An offer to tender is sufficient at the pleadings stage; not dismissed on this basis. |
| UCL standing and claim sufficiency | Plaintiff suffered injury from loss of property due to practices | Plaintiff did not allege loss of home; lacks standing | UCL claim dismissed for lack of standing; plaintiff may amend. |
| Misrepresentation and implied covenant claims | Defendant made misrepresentations delaying modification; implied covenant breached | Allegations fail to show duty, reliance, damages, or specific contractual basis | Negligent misrepresentation dismissed for lack of duty; intentional misrepresentation and breach of implied covenant dismissed with leave to amend. |
Key Cases Cited
- Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001 (9th Cir. 2008) (OTS preemption framework; field preemption and §560.2(c) exceptions explained)
- Branick v. Downey Sav. & Loan Ass’n, 39 Cal.4th 235 (Cal. 2006) (standing under UCL requires injury in fact and loss of money or property)
- Karlsen v. American Sav. & Loan Ass’n, 15 Cal.App.3d 112 (Cal. Ct. App. 1971) (tender and foreclosure-related remedies discussed)
- Nguyen v. Calhoun, 105 Cal.App.4th 428 (Cal. Ct. App. 2003) (tender requirements for setting aside foreclosures; adequacy of tender)
- 6 Angels, Inc. v. Stuart-Wright Mortgage, Inc., 85 Cal.App.4th 1279 (Cal. Ct. App. 2001) (court rejects outside-the-foreclosure challenges absent procedural defect)
- Malkoskie v. Option One Mortgage Corp., 188 Cal.App.4th 968 (Cal. Ct. App. 2010) (collateral attack on unlawful detainer judgment; context for foreclosure challenges)