Armstrong-Harris v. Wells Fargo Bank

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CEDRIC ARMSTRONG-HARRIS, Plaintiff, v. WELLS FARGO BANK, N.A., et al., Defendants.

No. 21-cv-07637-HSG

United States District Court, N.D. California

August 12, 2022

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

Re: Dkt. No. 7

HAYWOOD S. GILLIAM, JR. United States District Judge

This is a pro se action filed by Plaintiff Cedric Armstrong-Harris. Defendant Wells Fargo Bank, N.A.^[1] moves to dismiss the complaint. Dkt. No. 7. For the reasons below, the Court GRANTS IN PART and DENIES IN PART the motion.^[2]

I. BACKGROUND

Pro se Plaintiff Cedric Armstrong-Harris brings this lawsuit against Defendants Wells Fargo and Specialized Loan Servicing. Plaintiff's complaint alleges the following:

Plaintiff is the fee simple owner of a residential property in Oakland, California. In March 2007, a loan was taken out on the property and issued by World Savings Bank (which was later acquired by Wells Fargo). In June 2021, after Plaintiff could not pay the monthly mortgage due, Specialized Loan Servicing demanded payment of the remaining loan balance under the loan's terms. Around that time (the complaint does not state when), Plaintiff attempted to negotiate a loan modification agreement with Defendants to reduce his monthly mortgage payment, but the parties never entered into an agreement. Defendants eventually initiated foreclosure proceedings on the property.

On July 28, 2021, Plaintiff sued Wells Fargo and Specialized Loan Servicing in Alameda County Superior Court, asserting violations of the Truth in Lending Act (“TILA”), California's Unfair Competition Law (“UCL”), laws related to foreclosure proceedings, breach of contract, and various torts. The claims arise out of the loan that Plaintiff obtained from World Savings Bank in 2007 and the loan modification agreement negotiations he had with Defendants. After the case was filed in Alameda County Superior Court, Wells Fargo removed it to this Court. Dkt. No. 1. Wells Fargo now moves to dismiss. Dkt. No. 7.

II. LEGAL STANDARD

A. Rule 12(b)(6)

Federal Rule of Civil Procedure 8(a)(2) requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” While a complaint need not contain detailed factual allegations, facts pleaded by a plaintiff must be “enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain sufficient factual matter that, when accepted as true, states a claim that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. While this standard is not a probability requirement, “[w]here a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. (internal quotation marks and citation omitted). In determining whether a plaintiff has met this plausibility standard, the Court must “accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable” to the plaintiff. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005).

When a plaintiff is suing multiple defendants, the “complaint must specify exactly what each separate defendant is alleged to have done to cause plaintiff harm.” Fagbohungbe v. Caltrans, No. 13-CV-03801-WHO, 2014 WL 644008, at *5 (N.D. Cal. Feb. 19, 2014) (citation omitted); see also Gauvin v. Trombatore, 682 F.Supp. 1067, 1071 (N.D. Cal. 1988) (a plaintiff “must allege the basis of his claim against each defendant to satisfy Federal Rule of Civil Procedure 8(a)(2), which requires a short and plain statement of the claim to put defendants on sufficient notice of the allegations against them”).

A “document filed pro se is to be liberally construed and a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (internal quotation marks and citations omitted).

B. Leave to Amend

Leave shall be freely granted by the Court when justice requires. Fed.R.Civ.P. 15(a)(2); see also Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (“[I]n dismissing for failure to state a claim under Rule 12(b)(6), a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” (internal citation omitted)).

Wells Fargo asks that the Court categorically deny Plaintiff leave to amend any claims that he did not address in his opposition brief. Dkt. No. 24 at 9. Given the lenient pro se standard, the Court declines to adopt this approach. The Court notes that neither case that Wells Fargo cites in support of this proposition involved a pro se party. See Qureshi v. Countrywide Home Loans, Inc., No. 09-CV-04198-SBA, 2010 WL 841669 (N.D. Cal. Mar. 10, 2010); Tapia Carmona v. Cnty. of San Mateo, No. 18-CV-05232-LHK, 2019 WL 4345973 (N.D. Cal. Sept. 12, 2019).

III. DISCUSSION

A. UCL (Claims 1 and 7)

“A business act or practice may violate the UCL if it is either ‘unlawful,' ‘unfair,' or ‘fraudulent.' Each of these three adjectives captures ‘a separate and distinct theory of liability.'” Rubio v. Cap. One Bank, 613 F.3d 1195, 1203 (9th Cir. 2010) (citing Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th Cir. 2009)). To adequately plead a UCL claim alleging fraudulent practices, a plaintiff must satisfy the heightened pleading requirements of Rule 9(b). See Smith v. LG Elecs. U.S.A., Inc., No. 13-CV-04361 PJH, 2014 WL 989742, at *9 (N.D. Cal. Mar. 11, 2014) (applying heightened 9(b) pleading requirement to UCL fraud claim (citing Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003))); see also Davidson v. Kimberly-Clark Corp., 873 F.3d 1103, 1110 (9th Cir. 2017) (“To properly plead fraud with particularity under Rule 9(b), ‘a pleading must identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about the purportedly fraudulent statement, and why it is false.'” (quoting Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks and alterations omitted))).

Plaintiff brings his first and seventh claims under the “unlawful” and “fraudulent” prongs, respectively.

1. Unlawful Business Practices (Claim 1)

Plaintiff's “unlawful” UCL claim alleges that Wells Fargo's “deceptive business practices” are in violation of the TILA and the Home Owners' Loan Act (“HOLA”), 12 U.S.C. § 1461. Compl. ¶¶ 12, 33.

“The unlawful prong of the UCL ‘borrows violations of other laws and treats them as unlawful practices,' which the UCL then ‘makes independently actionable.'” Backhaut v. Apple, Inc., 74 F.Supp.3d 1033, 1050 (N.D. Cal. 2014) (quoting Cel-Tech Commc'ns., Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163, 180 (1999)). “Virtually any law-federal, state or local-can serve as a predicate for an action under [the UCL].” Smith v. State Farm Mut. Auto. Ins. Co., 93 Cal.App.4th 700, 718 (2001).

To the extent Plaintiff's UCL claim is predicated on a TILA violation, it fails because as the Court concludes below, see infra Section III.F, the TILA violation is time-barred. See Jordan v. Paul Fin., LLC, 745 F.Supp.2d 1084, 1098 (N.D. Cal. 2010) (“[A]ny claim under the ‘unlawful' prong of the UCL cannot use TILA as the predicate violation if the claim is time-barred.”). And to the extent Plaintiff's UCL claim is predicated on a violation of HOLA, it fails because it does not allege how the HOLA (and which of its provisions) was violated. See Stokes v. CitiMortgage, Inc., 2014 WL 4359193, at *11 (C.D. Cal. Sept. 3, 2014) (“If a plaintiff cannot state a claim under the predicate law, however, [the UCL] claim also fails.” (internal quotation marks omitted)). Plaintiff identifies only “Violations of Home Owners Loan Act of 1933, 12 USC 1461 [sic],” which is insufficient.

Plaintiff's first claim is dismissed. Because the Court cannot conclude that amendment would be futile, dismissal is with leave to amend.

2. Fraudulent Business Practices (Claim 7)

Plaintiff's seventh claim for fraud under the UCL alleges that Wells Fargo committed the following fraudulent business practices:

1) promising homeowners loan modifications that defendants have no intention of actually providing; 2) by routinely issuing NOD's without first complying with the legal requirements of California Civil Code section 2923.5; 3) by repeatedly demanding documentation from borrowers with full knowledge or in reckless disregard of the fact that said documentation had already been provided; 4) by continuing to demand and accept mortgage payments that have in fact foreclosed; 5) by intentionally misleading Plaintiff into believing that a foreclosure had not occurred or that one had been entered in “error”.

Id. ¶ 59.

Plaintiff plausibly alleges that Wells Fargo engaged in fraudulent business practices against him, including by promising him a loan modification with no intention of actually providing one and intentionally misleading him into believing that a foreclosure had not occurred or was entered in error. This alleges “the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about the purportedly fraudulent statement, and why it is false” under Rule 9(b), Davidson, 873 F.3d at 1110, and thus adequately states a claim for fraud under the UCL.

Wells...