ORDER GRANTING MOTION TO DISMISS
Defendant Wells Fargo moves to dismiss the Complaint in this mortgage case on several grounds. Although the Court does not find that Plaintiff Lisa Plastino’s claims are preempted or that she failed to tender, it agrees with Defendant that she has failed to state a claim. Accordingly, the Court DISMISSES the Complaint with leave to amend.
1. BACKGROUND
Plaintiff borrowed $700,000 from Defendant
In March 2011, representatives of Defendant “qualified Plaintiff over the telephone” for a loan modification. Id. ¶ 9. Plaintiff explained her current and anticipated future salaries, and the representative told her that, as long as she provided a letter from her employer stating that she would be making $110,000 a year starting in May 2011, and included current pay stubs demonstrating her $85,000 a year salary, she met modification standards. Id. Plaintiff provided that information, and the remaining modification documents, and
On April 11, 2011, Plaintiff received a letter from Defendant stating that she would be evaluated for a Home Affordable Modification Program (HAMP) loan modification and that “no foreclosure sale will be conducted and you will not lose your home during the HAMP evaluation.” Id. ¶ 10. On April 15, 2011, Defendant requested additional information, and Plaintiff provided it, including a letter stating that Plaintiff would be making $110,000 a year as of May, 2011. Id. Plaintiff was also informed that a trustee sale scheduled for April 20, 2011 would be postponed while the loan modification was processed. Id.
On May 7, 2011, Plaintiff received another letter from Defendant, confirming that she had provided all necessary documentation and that “no foreclosure sale will be conducted and you will not lose your home during the HAMP evaluation.” Id. ¶ 11.
On May 20, 2011, however, Plaintiff received a letter from Defendant informing her that Defendant was “unable to offer [her] a Home Affordable Modification.” Id. ¶ 12. Immediately upon receiving the letter, Plaintiff called Defendant, and was informed that the decision to deny her a loan modification was based on an income amount of $85,000, not $110,000. Id. ¶ 13. She was told to restart the loan modification process. Id.
On June 15, 2011, Plaintiff was again qualified for a loan modification over the phone and submitted all the required documentation. Id. ¶ 14. The representative for Defendant stated that a trustee sale would be continued indefinitely until the bank correctly processed her loan modification. Id. In May 2011, she was already making $110,000 a year, and informed Defendant of this, orally and in writing. Id. ¶ 15.
Between June 15 and August 1, 2011, Plaintiff called Defendant at least five times to check on the status of her loan modification. Id. ¶ 16. Each time she was told that the modification was under review and that she would not lose her home during the review process. Id. On August 11, 2011, a representative of Defendant called Plaintiff and asked her to resubmit pay stubs demonstrating her $110,000 salary. Id. ¶ 17. The representative, named Danny, told her that the loan modification was approved pending submittal of her latest pay stubs, and also that no foreclosure would occur. Id.
Plaintiff immediately faxed her latest pay stubs to Defendant, but when she called, at least five times, she could not reach Danny. Id. ¶ 18. Finally Plaintiff spoke with another representative, named Brandon, who stated that “based upon his review of the file history that Danny had failed to process the latest documents but that it was under review.” Id.
A trustee sale of the property took place on August 22, 2011. Id. ¶ 19. Defendant initiated and prevailed on an unlawful detainer action in state court. See RJN (dkt. 9) Ex. L. Judgment was entered January 31,2012. Id.
Plaintiff brought suit in state court and Defendant removed the case to this Court based on diversity jurisdiction. See Notice of Removal. Plaintiff brings five causes of action: (1) violation of California Business & Professions Code § 17200 (“UCL Claim”); (2) Stay of Eviction, Set Aside Sale, and Cancel Trustee’s Deed; (3) Fraud and Deceit — Negligent Misrepresentation; (4) Fraud and Deceit — Intentional Misrepresentation; and (5) Breach
II. LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in a complaint. Reto v. dock, Inc.,
A complaint should not be dismissed without leave to amend unless it is clear that the claims could not be saved by amendment. Swartz v. KPMG LLP,
III. DISCUSSION
Defendant moves to dismiss, arguing that: (A) all of Plaintiffs claims are preempted by the Home Owners Loan Act (“HOLA”); (B) Plaintiffs offer to tender is inadequate; and (C) Plaintiff fails to state a claim as to any of her causes of action. This Order addresses each argument in turn, concluding that only the last argument has merit.
A. HOLA Preemption
Defendant argues that HOLA applies to it and operates to bar Plaintiffs claims. See Mot. at 2-5. Plaintiff does not dispute the first point,
Congress enacted HOLA “to charter savings associations under federal law, at a time when record numbers of homes were in default and a staggering number of state-chartered savings associations were insolvent.” See Silvas v. E*Trade Mortg. Corp.,
OTS enumerates certain types of state laws that are preempted, including “state laws purporting to impose requirements regarding ... processing, origination, servicing sale or purchase of, or investment or participation in, mortgages.” 12 C.F.R. § 560.2(b)(10). If the state law is one of the enumerated types, “the analy
(c) State laws that are not preempted. State laws of the following types are not preempted to the extent that they only incidentally affect the lending operations of Federal savings associations or are otherwise consistent with the purposes of paragraph (a) of this section:
(1) Contract and commercial law;
(2) Real property law;
(3) Homestead laws specified in 12 U.S.C. 1462a(f);
(4) Tort law;
(5) Criminal law; and
(6) Any other law that OTS, upon review, finds:
(i) Furthers a vital state interest; and
(ii) Either has only an incidental effect on lending operations or is not otherwise contrary to the purposes expressed in paragraph (a) of this section.
12 C.F.R. § 560.2(c). Courts are to focus not on the nature of the cause of action, but on the “functional effect upon lending operations of maintaining the cause of action.” See Naulty v. GreenPoint Mortg. Funding, Inc., No. 09-1542,
Defendant argues that, “[rjegardless of whether Plaintiffs claims are that Wells Fargo failed to provide a promised loan modification, or the conclusion that Wells Fargo promised to stay foreclosure proceedings pending loan modification, these allegations clearly involve the “processing, origination, sale or purchase of ... mortgages” and “disclosure” and are therefore preempted.” Mot. at 4. This argument overreaсhes, as the language Defendant quotes pertains to “state laws purporting to impose requirements regarding---- Processing, origination, servicing, sale or purchase of ... mortgages,” 12 C.F.R. § 560.2(b)(10) (emphasis added), not to allegations that touch on such subjects. Moreover, Plaintiffs case is largely based on contract and tort; such laws are not preempted if, as here, they only incidentally affect lending. Id. “Courts have ... interpreted Silvas to not preempt all state law causes of action arising out of loan modification and/or foreclosure proceedings, but only those that impose new requirements on the lender.” Rumbaua v. Wells Fargo Bank, N.A., No. 11-1998,
Where plaintiffs’s claims have centered on a bank’s “inadequate disclosures of fees, interest rates, or other loan terms,” or “inadequate notice of various rights and procedures during the foreclosure process,” those claims have been preempted because they “would effectively impose requirements that banks include specific information in loan documents or provide specific notices during foreclosure.” See DeLeon v. Wells Fargo Bank, N.A., No. 10-01390,
that Wells Fargo falsely represented that it would complete a loan modification agreement and that no foreclosure sale would occur while the loan modification was pending, [but did] not seek toimpose a substantive requirement that a federal savings bank must always complete a loan modification agreement once the modification process has started or that a federal savings bank can never execute a sale while a loan modification is pending.... [, Plaintiffs were invoking only] the general duty not to engage in fraud or express deception in a manner that only incidentally affects lending activities.
Id. Accordingly, the claim was not preempted. Id.; see also Rumbaua,
Here, Plaintiffs claims do not seek to impose additional requirements on Defendant,
B. Failure to Tender
Defendant next asserts that “Plaintiffs Failure to Tender the Debt is Fatal to Her Complaint.” Mot. at 5.
Here, the Complaint states:
PLAINTIFF’S TENDER: Plaintiff hereby tenders through this Complaint to Defendants the amounts due and owing so that the claimed default may be cured and Plaintiff may be reinstated to all former rights and privileges previously agreed to by the parties. Plaintiff is ready, willing, and able to tender those necessary sums, if any, that theCourt finds due and owing in order to avail itself of the Court’s equity.
Notice of Removal Ex. A ¶ 22. Defendant argues that this is insufficient because it is a mere offer to tender and not an actual tender. See Mot. at 5-6 (citing Nguyen v. Calhoun,
The Court finds that an offer of tender is sufficient at the pleadings stage. See, e.g., Permito v. Wells Fargo Bank, N.A., No. 12-00545,
C. Failure to State a Claim
Defendant next moves to dismiss each of the individual causes of action — (1) violation of the UCL; (2) a claim to stay eviction proceedings, set aside the sale, and cancel the trustee deed; (3) the negligent and intentional misrepresentation claims; and (4) breach of the implied covenant of good faith and fair dealing — for failure to state a claim.
1. UCL Claim
Defendant argues that Plaintiffs UCL claim should be dismissed both because it fails to allege sufficient faсts to establish an unlawful, unfair or fraudulent business practice, and because Plaintiff fails to allege standing. See Mot. at 6-9. The Court does not reach the first argument because Defendant prevails on the second.
The Complaint alleges that “Defendants’ misrepresentations regarding its ability and/or willingness to postpone the trustee sale to allow a modification constitute a failure to negotiate in good faith, violates Civil Code §§ 2923.5 and 2923.6, and was done in bad faith with willful and wanton disregard to the interests of Plaintiff.” Notice of Removal Ex. A ¶24. It concludes, “As a direct, proximate, and foreseeable result of the Defendants’ wrongful conduct, as alleged above, the Plaintiff was subjected to unfair, unlawful and fraudulent acts and practices” and “Plaintiff is
To have standing under the UCL, Plaintiff must allege that she “suffered injury in fact and has lost money or property as a result of the unfair competition.” See Cal. Bus. & Prof.Code § 17204 (emphasis added); see also Degelmann v. Advanced Med. Optics, Inc.,
As Defendant argues, according to the Notice of Default and Election to Sell Under Deed of Trust, RJN Ex. H,
Similarly, in DeLeon,
Because Plaintiff has failed to plausibly allege that she lost her home as a result of Defendant’s actions, the Court dismisses the UCL claim for lack of standing. Plaintiff has leave to amend this claim.
2. Claim to Stay Eviction Proceedings, Set Aside Sale, Cancel Trustee Deed
Defendant also argues that Plaintiffs cаuse of action to stay eviction proceedings, set aside the sale, and cancel the trustee deed should be dismissed for failure to state a claim. See Mot. at 9-12. As an initial matter, the eviction proceedings
This Order will therefore address only the portion of this claim asking the Court to set aside the sale. As to that request, the Complaint alleges that “Plaintiff is the rightful and actual owner of the Property,” Notice of Removal Ex. A ¶ 28, that “Plaintiff is being threatened from [sic] being wrongly dispossessed and deprived of title to the above described real property as Defendant is proceeding to unlawfully, secretly and/or in bad faith submit the Property to a trustee sale,” id. ¶ 29, and that “Although the notices of default and of trustee’s sale appears valid on its face, it is invalid, void, and of no force or effect regarding Plaintiffs interests in the Property because the Notice of Trustee Sale was issued by a purported trustee despite the fact that a loan modification had been approved
Defendant argues that a completed foreclosure sale cannot be set aside based on an alleged oral agreement. Mot. at 9-10. Plaintiff responds that she is not alleging a breach of an oral agreement, but is instead alleging that “the bank failed to process her loan modification application, as it fraudulently stated it would, with the correct salary amount.” Opp’n at 13. Defendant explains, however, that even if Plaintiffs theory does not implicate an oral agreement, it nonetheless involves a challenge that stretches beyond the foreclosure proceeding itself. Reply (dkt. 13) at 4-5. Defendant cites to Nguyen v. Calhoun,
To the extent that Plaintiff is challenging the bank’s “[failure] to process her loan modification application, as it fraudulently stated it would, with the cоrrect salary amount,” Opp’n at 13, this appears to be a challenge not to the statutory proceeding but to something outside of it. It is also quite possible that the Court does not understand Plaintiffs claim, and that she is arguing that the sale should be set aside for some other reason. In either case, the cause of action is dismissed and Plaintiff may amend to more clearly articulate the basis for this cause of action, and specifically whether she is challenging Defendant’s failure to comply with the procedural requirements of the sale.
3. Negligent and Intentional Misrepresentation
a. Negligent Misrepresentation
Defendant next argues that Plaintiff has failed to state a сlaim for negligent misrepresentation because she has not alleged that Defendant owed her a duty of care. See Mot. at 12. This is correct. As with any negligence claim, the tort of negligent misrepresentation requires that Plaintiff allege a duty of care. See Eddy v. Sharp,
The negligent misrepresentation claim is therefore dismissed for failure to allege a duty of care. Plaintiff may amend, provided she believes that she can plausibly do so, and can also plausibly address the detrimental reliance/damages issue discussed below as to intentional misrepresentation,
b. Intentional Misrepresentation
As to Plaintiffs cause of action for intentional misrepresentation, Defendant argues that Plaintiff “fails to adequately plead a representation of past or material fact, detrimental reliance, or damages.” Mot. at 14.
The first point is unavailing. Although “[t]o be actionable, a ... misrepresentation must ordinarily be as to past or existing material facts” and not “[predictions as to future events,” Tarmann v. State Farm Mut. Auto. Ins. Co.,
Defendant is on firmer ground in arguing that the Complaint fails to plausibly allege detrimental reliance or damages. The Complaint alleges that “Plaintiff relied on the [unspecified] assertions by nоt making further payments on the loan,” Notice of Removal Ex. A ¶ 42, that she “was induced to not make payments to her detriment. Had Plaintiff known the actual facts, they [sic] would not have taken such action,” id. ¶ 46, and that “[a]s a proximate result of the fraudulent conduct of the Defendant as herein alleged, Plaintiff suffered damages in the form of the ... [lost] property, loss of attorney’s fees and expended costs” as well as other “damage[s] in a sum to be determined at trial,” id. ¶¶ 47-48. In sum, Plaintiff argues that she relied on Defendant’s misrepresentations, did not make further payments on her loan, and was therefore damaged.
But, as discussed above as to Plaintiffs UCL claim, the Notice of Default and Election to Sell Under Deed of Trust shows that Plaintiff was already $33,417.51 behind on her mortgage payments by December 28, 2010, and had not made a payment since April 2010. RJN Ex. H. The first alleged misrepresentation in the Complaint was in March 2011, see Notice of Removal Ex. A ¶ 9, but at that point Plaintiff had not paid her mortgage for over ten months. Accepting the truth of Plaintiff’s allegation that the March 2011 misrepresentation led her to “not [make] further payments on the loan,” id. ¶ 42, the failure to make further payments is not plausibly the cause of Plaintiff’s harm. See also DeLeon,
Because Plaintiff has failed to plausibly allege detrimental reliance and damages, the Court dismisses the intentional misrepresentation cause of action. Plaintiff may amend if she can plausibly allege that Defendant’s misrepresentations actually caused her harm.
4. Breach of the Implied Covenant
Finally, Defendant moves to dismiss Plaintiffs claim for breach of the implied covenant of good faith and fair dealing, arguing that “Plaintiff has not alleged any facts to show how Wells Fargo unfairly interfered with her right to receive the benefits of the deed of trust or mortgage note.” Mot. at 15.
The Complaint alleges that “Implied in the deed of trust, mortgage note is a[n] implied covenant of good faith and fair dealing. Defendants agreed to a postponement of the Trustee Sale so that Plaintiff [could] enter into a loan modification. However, Defendants subsequently failed to begin the loan modification and postpone the trustee sale.” Notice of Removal Ex. A ¶ 50. Plaintiff argues that it is not fatal to her claim that “there were no ‘terms’ that required the postponement of the trustee sale or a loan modification,” but that “Defendants unfairly interfered with her right to receive the benefits of the standing contracts with Defendants.” Opp’n at 19. This argument fails.
“The implied covenant оperates to protect the express covenants or promises of [a] contract ... [it] cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of [the parties’] agreement.” Perez v. Wells Fargo Bank, N.A., No. 11-02279,
This claim is therefore dismissed. Plaintiff may amend if she can identify a specific contractual provision of the deed of trust and mortgage that was violated by Defendant’s alleged bad faith.
IV. CONCLUSION
For the foregoing reasons, the Court DISMISSES the Complaint for failure to state a claim, and allows Plaintiff leave to amend within forty-five (45) days of this Order.
IT IS SO ORDERED.
Notes
. For the purposes of this Order, Plaintiffs allegations of material fact are taken as true and construed in the light most favorable to her. See Wyler-Summit P'ship v. Turner Broad. Sys., Inc.,
. Plaintiff borrowed the money from World Savings Bank, which was subsequently purchased by Wachovia Mortgage, which was subsequently purchased by Defendant. Id. For ease of reference, this Order will refer to all of these entities as “Defendant.”
. Indeed, HOLA has previously been found to apply to Wells Fargo post-merger. See Nguyen v. Wells Fargo Bank, N.A.,
. The exception is the UCL claim, which alleges that "Plaintiff was subjected to unfair, unlawful and fraudulent acts and practices" and is based in part on violations of California Civil Code §§ 2923.5 and 2923.6. See Notice of Removal Ex. A ¶¶ 25, 24. As those statutes would impose additional requirements on Defendant in the mortgage process, the UCL claim is dismissed as preempted to the extent that it depends on those statutes. See Giordano v. Wachovia Mortg., FSB, No. 5:10-cv-04661,
. Despite this sweeping proclamation, Defendant's argument is actually much narrower— it is that Plaintiff’s second claim, to set aside the trustee sale, cancel the trustee deed and stay the eviction, as well as any remedy sought for her other claims that would undo the foreclosure sale, cancel the deed of trust, or restore her title to the property, should be dismissed. Id.
. Quinteros v. Aurora Loan Services,
. “Although, as a general rule, a district court may not consider materials beyond the pleadings in ruling on a Rule 12(b) (6) motion, one exception to this general rule is that a court may take judicial notice of matters of public record without converting a motion to dismiss into a motion for summary judgment, as long as the facts noticed are not subject to reasonable dispute.” Skilstaf, Inc. v. CVS Caremark Corp.,
. To the extent that Plaintiff intended to bring a cause of action for rescission under California Civil Code § 3412, as she argues in her Opposition, see Opp’n at 15, she does not reference that section in her Complaint, see Notice of Removal Ex. A ¶¶ 27-33; however, she may do so upon amendment.
. Notably, this statement is inconsistent with the allegations in the rest of the Complaint, which are not that a lоan modification had been approved, but that, contrary to what Plaintiff had been promised, foreclosure took place while a loan modification was still being processed. See Compl. ¶¶ 18-19 (alleging that a representative named Brandon told Plaintiff that the loan modification was "under review,” "However, a trustee sale of the property occurred.”).
. Defendant's argument that this claim is impermissible because it is a collateral attack on' the judgment in the unlawful detainer action, see Mot. at 10 (citing Malkoskie v. Option One Mortgage Corp.,