Perez v. Wells Fargo Bank, N.A.

929 F.Supp.2d 988

Eugene PEREZ, et al., Plaintiffs,

v.WELLS FARGO BANK, N.A., et al., Defendants.

Case No. C–11–02279 JCS.

United States District Court, N.D. California.

March 8, 2013.

Ronald William Carter, Oakland, CA, for Plaintiffs.

M. Elizabeth Holt, Edward Rick Buell, III, Mark Douglas Lonergan, Sevrson & Werson, San Francisco, CA, Glenn Harlan Wechsler, Law Offices of Glenn H. Wechsler, Walnut Creek, CA, for Defendants.

ORDER GRANTING PLAINTIFFS' MOTION TO REMAND; DENYING DEFENDANTS' MOTIONS TO DISMISS

JOSEPH C. SPERO, United States Magistrate Judge.

I. INTRODUCTION

Plaintiffs Eugene Perez and Herenia Perez (“Mrs. Perez”) (“Plaintiffs”) allege four causes of action against Defendants Wells Fargo Bank, N.A. (“Wells Fargo”) and First American Loanstar Trustee Services LLC (“Loanstar”) (“Defendants”) arising out of the events surrounding the foreclosure sale of Plaintiffs' real property located at 95 Monterey Drive, Daly City, California (“Property”). Presently before the Court are three Motions: (1) Plaintiffs' Motion to Remand Case to State Court (“Motion to Remand”); (2) Wells Fargo's Motion to Dismiss Plaintiff's Second Amended Complaint (“Wells Fargo Motion”); and (3) Loanstar's Motion to Dismiss Plaintiff's Second Amended Complaint (“Loanstar Motion”). A hearing on the Motions was held on February 15, 2013 at 9:30 a.m. For the reasons discussed below, the Court GRANTS Plaintiffs' Motion to Remand and DENIES both Defendants' Motions to Dismiss.¹

II. REQUESTS FOR JUDICIAL NOTICE

Wells Fargo and Loanstar have each filed a request for judicial notice of various documents that they are assert are either matters of public record or directly referenced in Plaintiffs' Second Amended Complaint (“SAC”). See Docket Nos. 62 & 65 (hereinafter “Wells Fargo RJN” and “Loanstar RJN”). Plaintiffs have not objected to Defendants' requests or challenged the authenticity of any of the attached documents. Each of the documents is either a public record or is referenced in the SAC. Accordingly, the Court takes judicial notice of all of the documents offered in Defendants' requests for judicial notice pursuant to Rule 201 of the Federal Rule of Evidence. The Court may consider the documents of which it takes judicial notice, along with the allegations of Plaintiff's Complaint, on a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Catholic League for Religious and Civil Rights v. City and County of San Francisco, 464 F.Supp.2d 938, 941 (N.D.Cal.2006).

III. BACKGROUNDA. The Second Amended Complaint

Plaintiffs state that Mrs. Perez refinanced the Property on August 17, 2007 by borrowing $525,000.00 from Wells Fargo. SAC, ¶ 10. The 8.5% interest only loan was secured by a deed of trust on the Property. Id. The monthly interest only payment was $3,718.75. Id.

As of October 2008, Mrs. Perez had missed two payments on the note. Id. at ¶ 11. Wells Fargo offered her a forbearance agreement under which it would agree to modify the loan if she made three monthly payments of $4,917.59 beginning on November 30, 2008, and one payment of $8,432.94 on February 28, 2009. Id. Plaintiffs contend that the forbearance agreement, with its increased monthly payments, was an unconscionable contract of adhesion. Id. at ¶ 12. Mrs. Perez made the first two payments, but was unable to make the last two payments. Id.

On March 18, 2009, Wells Fargo recorded a notice of default. Id. at ¶ 13. A trustee's sale was scheduled for July 9, 2009. Id. The sale was postponed after Plaintiffs filed a number of bankruptcy petitions beginning in April 2009. Id. At some point, the sale was set for November 24, 2009. Id. at ¶ 14. In November 2009, Mrs. Perez retained an attorney, John P. Skowronski (“Skowronski”) to assist her in applying for a loan modification. Id. Pursuant to Wells Fargo's policy, the sale was postponed a number of times pending its consideration of Mrs. Perez's application. Id. at ¶¶ 14–15. The date was pushed back to December 14, 2009, then to January 25, 2010, then to February 24, 2010. Id. at ¶ 15.

On February 11, 2010, a Wells Fargo agent named Amanda informed Skowronski that Plaintiffs' property was out of foreclosure. Id. at ¶ 16. Wells Fargo delayed in processing Mrs. Perez's application for a loan modification until June 17, 2010. Id. at ¶ 17. At that point, a Wells Fargo manager named Jost Farber notified Skowronski that the case was being transferred from Amanda to Kelly. Id. That same day, Kelly requested documents from Mrs. Perez. Id. On June 22, 2010, Dr. Nicholas Agbabiaka (“Agbabiaka”) faxed Wells Fargo the requested documents on Mrs. Perez's behalf. Id. at ¶ 18. The next day, June 23, 2010, Agbabiaka called Kelly to confirm that he had faxed the requested documents to the correct number. Id. at ¶ 19.

At some point, the foreclosure sale was rescheduled for June 28, 2010. See id. During the June 23, 2010 phone call, Kelly confirmed to Agbabiaka that the June 28, 2010 foreclosure sale had been canceled. Id. On June 26, 2010, Agbabiaka called Loanstar's status line to check the status of the June 28, 2010 foreclosure sale. Id. at ¶ 20. The recorded message stated that the sale had been canceled. Id. Agbabiaka, Mrs. Perez, and Agbabiaka's associate Alexander Nixon heard the recorded message. Id. Even so, the foreclosure sale was held on June 28, 2010. Id. at ¶ 21.

Plaintiffs allege that there were no bidders at the foreclosure sale, so the property reverted to Wells Fargo. Id. A trustee's deed was recorded on July 2, 2010. Id. At the time of the sale, Plaintiffs allege that Wells Fargo stated that Mrs. Perez owed $617,953.10 on the loan. Id. Plaintiffs contend that the fair market value of the house on the date of the sale was $740,000.00. Id. at ¶ 24. Wells Fargo ultimately sold the house to a third party on or about March 30, 2011 for approximately $645,000.00. Id. at ¶ 25.

In a letter dated August 10, 2010, Plaintiffs contend that Wells Fargo notified Mrs. Perez that intended to modify her loan by reducing the interest rate such that her interest only payment was going to be reduced by $1,093.75 to $2,625.00. Id. at ¶ 22. Plaintiffs were evicted from the Property in or around December 2010, and were unable to collect all of their personal belongings. Id. at ¶ 23.

Plaintiffs allege four causes of action:

(1) Violation of the Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”), California Civil Code Sections 1788, et seq., by Defendant Wells Fargo: Plaintiffs contend that Wells Fargo was a debt collector engaged in debt collection practices within the meaning of the Rosenthal Act because it was collecting on a mortgage debt pursuant to the terms of the loan. Id. at ¶ 28. Plaintiffs allege that Wells Fargo knowingly and willfully violated the Rosenthal Act by using false, deceptive, and misleading statements in connection with its collection of Plaintiffs' debt. Id. at ¶ 29. Plaintiffs base their claim on the allegation that Wells Fargo falsely told their agent that the sale scheduled for June 28, 2010 had been canceled thereby deceiving and misleading them into believing that the sale would not proceed. Id. at ¶¶ 30–31. Plaintiffs contend that this statement caused them to lose equity in their property, to lose their personal property, and to suffer severe emotional distress. Id. at ¶ 32.

(2) Violation of California Business and Professions Code Sections 17200, et seq. (“UCL”), by both Defendants: Plaintiffs allege that Wells Fargo engaged in unfair and fraudulent business practices in violation of the UCL when it induced Mrs. Perez to enter into the forbearance agreement as a means of curing a two-month delinquency. Id. at ¶ 35. Plaintiffs contend that Wells Fargo knew or should have known that Mrs. Perez could not afford the higher forbearance payments so she was bound to default on the arrangement. Id. Plaintiffs also contend that Wells Fargo knew or should have known that it would be able to commence foreclosure proceedings as soon as the note was three months delinquent. Id.

Plaintiffs further allege that Wells Fargo engaged in unfair, fraudulent, and unlawful business practices in violation of the Rosenthal Act when its agent falsely told Mrs. Perez's agent that the trustee sale scheduled for June 28, 2010 had been canceled pending a decision on her application for a loan modification. Id. at ¶¶ 36, 38. Similarly, Plaintiffs allege that Loanstar engaged in unfair, fraudulent, and unlawful business practices in violation of the Rosenthal Act when it falsely notified Plaintiffs, via a recorded message, that the June 28, 2010 trustee's sale had been canceled. Id. at ¶¶ 37–38.

Plaintiffs claim that Defendants UCL violations caused them to lose equity in their property, lose personal property, and suffer severe emotional distress. Id. at ¶ 39.

(3) Wrongful Foreclosure, California Civil Code Sections 2924, et seq., by both Defendants: Plaintiffs allege that Defendants violated the notice provisions of California Civil Code section 2924 by proceeding with the foreclosure sale even though they had given notice that the June 28, 2010 sale had been canceled. Id. at ¶¶ 42–43. Plaintiffs claim that this caused them to lose equity in their property, lose personal property, and suffer severe emotional distress. Id. at ¶ 44.

(4) Negligence by Wells Fargo: Plaintiffs allege that Wells Fargo had a duty to use reasonable care in processing Mrs. Perez's application for a loan modification. Id. at ¶ 45.² Plaintiffs allege that Wells Fargo breached that duty by selling Plaintiffs' Property at the trustee sale even though Wells Fargo was still considering Mrs. Perez's application for a loan modification and told her agent that the sale had been canceled. Id. at ¶ 46. Plaintiffs claim that, as a proximate result of this negligence, they lost equity in their property, lost personal property, and suffered severe emotional distress. Id. at ¶ 47.

B. Motion to Remand

1. Motion

Plaintiffs move to...