Warren v. PNC Bank N.A.

671 F.Supp.3d 1035

Christopher WARREN, Plaintiff, v. PNC BANK NATIONAL ASSOCIATION, Defendant.

Case No. 22-cv-07875-WHO

United States District Court, N.D. California

Signed April 30, 2023

Anthony Paul Cara, CDLG, PC, Costa Mesa, CA, for Plaintiff.

Kelly Andrew Beall, Cathy Lynn Granger, Wolfe & Wyman LLP, Irvine, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS

Re: Dkt. No. 17

William H. Orrick, United States District Judge

Defendant PNC Bank National Association ("PNC") moves to dismiss this complaint brought by plaintiff Christopher Warren, who alleges that PNC violated federal regulations and California law by failing to notify or provide him with certain information before foreclosing on and selling his home. The motion is GRANTED in part and DENIED in part. Warren has plausibly alleged violations of the California Homeowner Bill of Rights ("HBOR") and Real Estate Settlement Procedures Act ("RESPA") based on PNC's alleged failure to provide him information before and after filing a notice of default, and alleged failure to respond to his notice of error. His negligence claim may proceed based on the statutory duties imposed by the HBOR and RESPA and the alleged breaches of those duties. His Unfair Competition Law ("UCL") claim may also proceed based on these predicate violations.

Other claims fall short and are DISMISSED with leave to amend. As pleaded, Warren's wrongful foreclosure claim is too conclusory to proceed, as is his cancellation of instruments claim. The UCL claim is also too conclusory with respect to the "unfair" and "fraudulent" prongs. To the extent that it relies on these theories of liability, it is DISMISSED.

BACKGROUND

According to the complaint, Warren was "the rightful and lawful owner" of a residence located at 1907 S. Forrest Hill Place in Danville, California ("the property"). Compl. [Dkt. No. 1-1] ¶ 1. It alleges that in January 2015, Warren obtained a $528,000 mortgage loan on the property from lender MB Financial Bank, N.A., which was memorialized by a deed of trust. Id. ¶ 9. The deed of trust was allegedly assigned to PNC on August 2, 2018. Id. ¶ 12.

On January 17, 2021, Warren allegedly tried to pay his mortgage payment on PNC's website, but "learned that his payment had not gone through and applied to his account." Id. ¶ 10. He "immediately contacted PNC" and notified it of the error, tendered $10,000 "to correct any arrears as a result of the error in payment," and told PNC that he was renovating the property "in preparation to place it on the market." Id. At some point (although the complaint does not specify when), Warren also attempted to contact PNC "to obtain a debt validation, alternatives to foreclosure as he was planning on selling, and [a] loan modification," but PNC allegedly "would not take his phone calls or respond to his correspondence." See id. ¶ 11.

On June 15, 2022, the complaint alleges that a notice of default and election to sell under a deed of trust was recorded at the Contra Costa County Recorder's Office. Id. ¶ 13. A notice of trustee's sale was recorded on August 9, 2022, with a sale date set for November 8. Id. ¶ 14.

Between October 26 and November 4, 2022, the complaint alleges that Warren "sent several correspondences to PNC" and "tendered payment in the amount of $19,500.00, $2457.25, while referencing his previous payment of $10,000." Id. ¶ 15. It further alleges that Warren "never heard from PNC . . . either in response to his correspondence or to explore alternatives to foreclosure, at any time." Id.

The complaint alleges that PNC foreclosed on the property and recorded a trustee's deed upon sale, but does not specify when. See id. ¶ 64. According to a copy of the deed upon sale proffered by PNC, it was recorded on January 3, 2023. See RJN [Dkt. No. 18] Ex. 4.¹

Warren sued PNC in state court on November 25, 2022, alleging violations of RESPA, the HBOR, and UCL, along with claims of negligence, wrongful foreclosure, and cancellation of instruments. See Dkt. No. 1-1. PNC removed the matter to this court on December 9, 2022. Dkt. No. 1. It then moved to dismiss the complaint. Dkt. No. 17.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion, the plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible when the plaintiff pleads facts that allow the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). There must be "more than a sheer possibility that a defendant has acted unlawfully." Id. While courts do not require "heightened fact pleading of specifics," a plaintiff must allege facts sufficient to "raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 570, 127 S.Ct. 1955.

In deciding whether the plaintiff has stated a claim upon which relief can be granted, the court accepts his allegations as true and draws all reasonable inferences in his favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

If the court dismisses the complaint, it "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." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). In making this determination, the court should consider factors such as "the presence or absence of undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party and futility of the proposed amendment." Moore v. Kayport Package Express, 885 F.2d 531, 538 (9th Cir. 1989).

DISCUSSION

I. CALIFORNIA HOMEOWNER BILL OF RIGHTS CLAIMS

The HBOR "provide[s] protections for homeowners facing non-judicial foreclosures and reform[s] aspects of the foreclosure process." Patera v. Citibank, N.A., 79 F. Supp. 3d 1074, 1087 (N.D. Cal. 2015) (citation omitted and cleaned up). Warren asserts two violations of the HBOR: sections 2923.5 and 2924.9 of the California Civil Code. Compl. ¶¶ 18-34.²

A. "Owner-Occupied"

To state violations of sections 2923.5 and 2924.9, Warren "must allege that the subject property is owner-occupied." See Greene v. Wells Fargo Bank, N.A., No. 15-CV-00048-JSW, 2016 WL 360756, at *2 (N.D. Cal. Jan. 28, 2016). California Civil Code section 2924.15 provides that sections 2923.5 and 2924.9 "shall apply only to a first lien mortgage or deed of trust" that is either "secured by owner-occupied residential real property containing no more than four dwelling units" or "secured by residential real property that is occupied by a tenant and that contains no more than four dwelling units" and meets certain other conditions. Cal. Civ. Code § 2924.15(a). " '[O]wner-occupied' means that the property is the principal residence of the borrower and is security for a loan made for personal, family, or household purposes." Id. § 2924.15(a)(1)(B).

PNC argues that Warren's first and third claims fail because the complaint does not allege that the property is "owner-occupied." Mot. to Dismiss ("MTD") [Dkt. No. 17] 4:17-5:4. Instead, PNC contends, the complaint "simply alleges in a conclusory manner" that Warren was the "rightful and lawful owner" of the property. See id. at 4:28-5:3 (citing Compl. ¶ 1).

Although Warren does not address this argument in his opposition, PNC's argument falls short. It overlooks allegations within the complaint that Warren "owned the property and has lived within subject property years prior to foreclosure and when the notice of default was issued." See Compl. ¶¶ 20, 32. PNC also brushes aside the allegation that the property "is [sic] primary residence." See id. ¶ 1. This appears to be a typographical error; coupled with the other allegations that Warren lived at the property for years prior to foreclosure and when the notice of default was issued, it plausibly supports that the property was "owner-occupied."

B. Material Violations

Next, PNC argues that Warren's first and third claims should be dismissed because the complaint does not allege specific facts showing that the alleged violations of sections 2923.5 and 2924.9 were "material." MTD at 5:5-6.1. Certain sections of the HBOR rely on California Civil Code section 2924.12 for remedies, which provides in part:

After a trustee's deed upon sale has been recorded, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall be liable to a borrower for actual economic damages . . . resulting from a material violation of section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17 by that mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent where the violation was not corrected and remedied prior to the recordation of the trustee's deed upon sale.

Cal. Civ. Code § 2924.12(b). But it only provides remedies for "material" violations of these provisions. See id.

There is some disagreement over whether materiality should be considered at the pleadings stage. See Cardenas v. Caliber Home Loans, Inc., 281 F. Supp. 3d 862, 869 (N.D. Cal. 2017) ("Some [district courts] have concluded that materiality is a factual question that should not be resolved on a motion to dismiss.") (citing cases). While Warren need not prove materiality at this point, I agree that he "must plead something to satisfy 2924.12's materiality requirement"—just as he must with any element of his claims. See ...