Time of Request: Friday, June 08, 2012

Client ID/Project Name:

Number of Lines: 1274
Job Number:
1828:354463245

13:18:52 EST

Research Information
Service:
EasySearch(TM) Feature
Print Request: Selected Document(s): 3-5
Source: CA Federal & State Cases, Combined
Search Terms: Plaintiff verdict, mortgage fraud, unclean hands, abuse of
judicial process, fraud, wrongful foreclosure, unlawful eviction

Send to:

TERMINAL, SIX
ALAMEDA COUNTY LAW LIBRARY
125 12TH ST
OAKLAND, CA 94607-4912

115Q75

Page 2

Page 3
2011 U.S. Dist. LEXIS 89049, *

3 of 100 DOCUMENTS
KOKOPELLI COMMUNITY WORKSHOP CORPORATION, et al., Plaintiffs, vs.
SELECT PORTFOLIO SERVICING, INC., et al., Defendants.
CASE NO. 10CV1605 DMS (RBB)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
CALIFORNIA
2011 U.S. Dist. LEXIS 89049
August 9, 2011, Decided
August 10, 2011, Filed
PRIOR HISTORY: Kokopelli Cmty. Workshop Corp. v.
Select Portfolio Servicing, Inc., 2011 U.S. Dist. LEXIS
89045 (S.D. Cal., Aug. 9, 2011)
COUNSEL: [*1] Catherine Bryan, Plaintiff, Pro se,
Carlsbad, CA.
Betty Bryan, Plaintiff, Pro se, Carlsbad, CA.
For Litton Loan Service, as a company owned by
Goldman Sachs Bank, Goldman Sachs Bank as acting
trustee on behalf of the holders of the Gsamp Trust 2006HE3 Mortgage pass thru certificates, series 2006-HE3,
For MTGLQ Investors, LP, as a company owned by,
Goldman Sachs Bank, Defendants: Kalama Mark LuiKwan, LEAD ATTORNEY, Severson & Werson A
Professional Corporation, San Francisco, CA; Regina Jill
McClendon, LEAD ATTORNEY, Severson and Werson,
San Francisco, CA.
For Bill Koch, in his capacity as agent for Select
Portfolio Servicing Inc. F/K/A Fairbanks Capital Corp.,
Select Portfolio Servicing, Inc., a Utah corporation doing
business in the State of California, formerly known as
Fairbanks Capital Corp., Defendants: Gwen H. Ribar,
LEAD ATTORNEY, Wright Finley and Zak, Newport
Beach, CA; William J. Idleman, LEAD ATTORNEY,
Wright Finlay & Zak LLP, Newport Beach, CA.
For Stephen C Wichmann, in his capacity as agent for
Goldman Sachs Bank D/B/A MTGLQ Investors, LP,
Defendant: Cathy A Knecht, LEAD ATTORNEY, Barry
Gardner & Kincannon APC, Carlsbad, CA.

For Goldman Sachs Mortgage Company, erroneously

[*2] sued as Goldman Sachs Capital Association,
Goldman Sachs Bank and Goldman Sachs Bank acting
as trustee on behalf of the holders of the GSAMP Trust
2006-HE3, Defendant: Joseph E Floren, LEAD
ATTORNEY, Morgan Lewis & Bockius LLP, San
Francisco, CA; Tricia Takagi, LEAD ATTORNEY,
Morgan Lewis and Bockius LLP, Los Angeles, CA.
JUDGES: HON. DANA M. SABRAW, United States
District Judge.
OPINION BY: DANA M. SABRAW
OPINION
ORDER GRANTING IN PART AND DENYING IN
PART MOTIONS TO DISMISS PLAINTIFFS'
THIRD
AMENDED
COMPLAINT
BY
DEFENDANTS GOLDMAN SACHS MORTGAGE
COMPANY, LITTON LOAN SERVICING, AND
MTGLQ INVESTORS, LP
Pending before the Court are motions to dismiss
Plaintiffs' Third Amended Complaint ("TAC") by (1)
Goldman Sachs Mortgage Company ("Goldman") and
(2) Litton Loan Servicing ("Litton") and MTGLQ
Investors, LP ("MTGLQ" and, with Goldman and Litton,
"Defendants"). (Docs. 82-83.) For the following reasons,
Goldman's motion to dismiss is granted and Litton and
MTGLQ's motion to dismiss is granted in part and
denied in part.
I.

Page 4
2011 U.S. Dist. LEXIS 89049, *

BACKGROUND
On November 7, 2005, Plaintiffs obtained a
refinance mortgage loan from Novelle Financial Services
in the amount of $649,000.00, secured by a Deed of
Trust on the subject property, which Plaintiff [*3] Betty
Bryan purchased in 1950. (TAC 2, 46; MTGLQ/Litton
RJN Ex. 1.) 1 Plaintiffs allege they sent a notice of
rescission to certain Defendants pursuant to the Truth in
Lending Act, dated February 5, 2007. (TAC at 29, 40,
111, 137, 140.) Subsequent to the alleged notice of
rescission, Plaintiffs made an additional approximately
$80,000 in payments to Defendant Select Portfolio
Servicing, Inc. ("SPS"). (Id. at 282-83.) Nonetheless,
a Notice of Default was recorded on June 19, 2008.
(MTGLQ/Litton RJN Ex. 3.) Plaintiffs filed a Complaint
in San Diego Superior Court on November 3, 2008.
(TAC 37, 49.) An Assignment of the Deed of Trust
transferring the Deed to MTGLQ Investors, LP was
signed on October 21, 2008 and recorded on December
15, 2008. (MTGLQ/Litton RJN Ex. 2.) Plaintiff Betty
Bryan filed for Chapter 13 bankruptcy on November 4,
2008. (TAC 122.) On March 23, 2009, Plaintiffs Betty
Bryan and Catherine Bryan recorded a Grant Deed
deeding their interest in the subject property to Kokopelli
Community Workshop Corporation. (MTGLQ/Litton
RJN Ex. 5.) A Trustee's Deed Upon Sale was recorded on
October 30, 2009, granting to MTGLQ Investors, LP all
interest in the subject property [*4] under the Deed of
Trust. (MTGLQ/Litton RJN Ex. 6.) This action was
removed to this Court on August 2, 2010. (Doc. 1.)
Plaintiffs subsequently filed the TAC on October 8,
2010. (Doc. 9.)
1
In support of their motion to dismiss,
Defendants Litton and MTGLQ request the Court
take judicial notice of the following documents:
(1) Deed of Trust, (2) Corporate Assignment of
Deed of Trust, (3) Notice of Default, (4)Notice of
Trustee's Sale, (5) Grant Deed, and (6) Trustee's
Deed Upon Sale. Goldman similarly asks the
Court to take judicial notice of these documents,
as well as documents filed in this action and the
docket for this action prior to removal. A court
may take judicial notice of facts that are not
subject to reasonable dispute and are either "(1)
generally known within the territorial jurisdiction
of the trial court or (2) capable of accurate and
ready determination by resort to sources whose
accuracy cannot reasonably be questioned." Fed.
R. Evid. 201(b). As the documents submitted by
Defendants are matters of public record subject to
judicial notice under Federal Rule of Evidence
201, Defendants' requests for judicial notice are
granted.

The TAC includes 18 claims for relief: (1) [*5]

violation of the Truth in Lending Act ("TILA"), (2)
violation fo the California Rosenthal Fair Debt
Collection Practices Act ("RFDCPA"), (3) violation of
the Fair Debt Collection Practices Act ("FDCPA"), (4)
wrongful foreclosure, (5) violation of the Real Estate
Settlement Procedures Act ("RESPA"), (6) breach of
fiduciary duty, (7) fraud-intentional misrepresentation,
(8) fraud-negligent misrepresentation, (9) violation of
California Business and Professions Code 17200, (10)
breach of contract, (11) breach of implied covenant of
good faith and fair dealing, (12) violation of California
Civil Code 2923.5, (13) quiet title, (14) elder abuseviolation of Welfare and Institutions Code 15610, (15)
rescission, (16) accounting, (17) to set aside trustee's
sale, and (18) to cancel the trust deed.
Defendants Bill Koch and SPS filed a motion to
dismiss Plaintiffs' TAC on October 28, 2010. (Doc. 13.)
On January 24, 2011, Defendant Stephan Wichmann
filed a motion to dismiss the TAC. (Doc. 36.) On
February 22, 2011, the Court issued an Order granting
Defendant Stephen Wichmann's unopposed motion to
dismiss the TAC with prejudice and granting in part and
denying in part the motion to dismiss [*6] filed by
Defendants Bill Koch and SPS. (Doc. 46.) The Court
granted Plaintiffs leave to file a Fourth Amended
Complaint within 20 days of the date of the Order, which
Plaintiffs elected not to do. The Court issued an Order on
April 14, 2011 dismissing Plaintiff Kopopelli
Community Workshop Corporation from the action in
light of Plaintiffs' failure to timely substitute in new
counsel and resulting pro se status and instructing
Defendants to file a response to the TAC by May 2,
2011. (Doc. 68.) Accordingly, Defendants filed the
instant motions to dismiss on May 2, 2011. (Docs. 8283.) Plaintiffs filed an opposition to the motions and
Defendants each filed a reply. (Docs. 100, 102-03.)
II.
LEGAL STANDARD
A party may move to dismiss a claim under Rule
12(b)(6) if the claimant fails to state a claim upon which
relief can be granted. Fed. R. Civ. P. 12(b)(6). The
Federal Rules require a pleading to include a "short and
plain statement of the claim showing that the pleader is
entitled to relief." Fed. R. Civ. P. 8(a)(2). The Supreme
Court, however, recently established a more stringent
standard of review for pleadings in the context of 12(b)
(6) motions to dismiss. See Ashcroft v. Iqbal, 556 U.S.
662, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); [*7]
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct.
1955, 167 L. Ed. 2d 929 (2007). To survive a motion to
dismiss under this new standard, "a complaint must

Page 5
2011 U.S. Dist. LEXIS 89049, *

contain sufficient factual matter, accepted as true, to

'state a claim to relief that is plausible on its face.'" Iqbal,
129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 570).
"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. (citing Twombly, 550 U.S. at
556). "Determining whether a complaint states a
plausible claim for relief will . . . be a context-specific
task that requires the reviewing court to draw on its
judicial experience and common sense." Id. at 1950
(citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir.
2007)). The reviewing court must therefore "identify the
allegations in the complaint that are not entitled to the
assumption of truth" and evaluate "the factual allegations
in [the] complaint to determine if they plausibly suggest
an entitlement to relief." Id. at 1951.
III.
DISCUSSION
A. Goldman
As an initial matter, Goldman argues Plaintiffs'
conclusory allegations that Goldman is an "investor" or
"creditor" with [*8] respect to their mortgage are
insufficient to support any of the claims stated against
Goldman in the TAC and such allegations are refuted by
the documents attached to the TAC, none of which
indicate Goldman is connected to Plaintiffs' mortgage in
any way. Goldman argues "GSAMP Trust 2006-HE3,"
which is a separate entity from Goldman and which has
not been named by Plaintiffs as a defendant in this
action, owned Plaintiffs' loan for a short while, but there
is no evidence Goldman was in any way involved with
Plaintiffs' loan at any point. On reply, Goldman further
argues, even if Goldman owned Plaintiffs' loan for a brief
period as it was transitioned from the previous owner to
the GSAMP Trust 2006-HE3, as Plaintiffs argue in their
opposition, such brief ownership is not sufficient to
support the claims against Goldman in the TAC. In the
TAC, Plaintiffs allege Goldman is liable to them based
on its relationships with other named defendants. (See
TAC at 2 (Plaintiffs are "alleging that their federal and
state rights were violated, against: GOLDMAN SACHS
BANK d/b/a MTGLQ INVESTORS LP. GOLDMAN
SACHS BANK AS ACTING TRUSTEE ON BEHALF
OF THE HOLDERS OF THE GSAMP TRUST 2006HE3 MORTGAGE PASS [*9] THRU CERTIFICATES
SERIES 2006-HE3. . . . DEMARCO FLETCHER,
ACTING IN HIS CAPACITY AS SALES AGENT FOR
GOLDMAN SACHS BANK. GOLDMAN SACHS
CAPITAL ASSOCIATION . . . STEPHEN WICHMANN
IN HIS CAPACITY AS ATTORNEY AND AGENT
FOR GOLDMAN SACHS BANK."); see also id. at

29, 33, 35.) Plaintiffs first allege "Goldman Sachs Bank

was and is acting on behalf of the trust beneficiary, AS
ACTING TRUSTEE ON BEHALF OF THE HOLDERS
OF THE GSAMP TRUST 2006-HE-3 MORTGAGE
PASS THRU CERTIFICATES." (TAC 34, 89.)
However, LaSalle Bank is the acting trustee of holders of
the GSAMP Trust 2006-HE-3, as stated in the Corporate
Assignment of Deed of Trust. (Goldman RJN Ex. 3.)
Plaintiffs also allege certain other defendants were
acting as agents of Goldman. "To allege an agency
relationship, a plaintiff must allege: (1) that the agent or
apparent agent holds power to alter legal relations
between principal and third persons and between
principal and himself; (2) that the agent is a fiduciary
with respect to matters within scope of agency; and (3)
that the principal has right to control the conduct of the
agent with respect to matters entrusted to him."
Palomares v. Bear Stearns Res. Mrtg. Corp., No.
07cv1899 WQH (BLM), 2008 U.S. Dist. LEXIS 19407,
*11, 2008 WL 686683, at *4 (S.D. Cal. Mar. 13, 2008)
(citation [*10] omitted). Plaintiffs allege "they will
provide reasonable discovery to the Court and expert
witness testimony substantiating and proving the
principal agent relationship between mortgage loan
broker, Defendant Demarco Fletcher and Defendant
Select Portfolio, Defendant Litton Loan Service, and
Defendant Goldman Sachs Bank." (TAC 57.) However,
they do not allege any facts in support of their claim of
an agency relationship between Goldman and other
entities in the TAC.
Similarly, Plaintiffs' allegations that Goldman is the
parent company of other entities are insufficient to
support claims against Goldman. (See id. at 18
("MTGLQ Investor, L.P. . . . is a limited partnership of
unknown capacity directly and wholly owned by
Goldman Sachs Bank"), 19 ("Litton Loan Service . . . is a
mortgage servicer of unknown capacity directly and
wholly owned by Goldman Sachs Bank"), 21 ("Select
Portfolio Servicing Incorporated . . . is directly owned by
defendant Goldman Sachs Bank").) A parent company is
not generally liable for the acts of its subsidiaries merely
because of the corporate relationship. See, e.g., Walker v.
Signal Cos., 84 Cal. App. 3d 982, 1001, 149 Cal. Rptr.
119 (1978)("more is required than solely [*11] a parentsubsidiary corporate relationship to create liability of a
parent for the actions of its subsidiary"). Plaintiffs here
have not alleged facts supporting a claim for liability on
the basis of alter ego. The Court agrees Plaintiffs have
failed to make sufficient factual allegations as to conduct
by Goldman and have failed to allege facts supporting a
finding of Goldman's vicarious liability for the actions of
other defendants. Nonetheless, the Court addresses each
of Plaintiffs' claims below.

Page 6
2011 U.S. Dist. LEXIS 89049, *

B. TILA and Rescission

Plaintiffs allege they were not provided the requisite
disclosures under TILA at the time of their loan, thereby
extending their right of rescission to three years from the
date of the loan; they subsequently exercised their right
to rescind the loan pursuant to TILA by sending
Defendants a written notice of rescission; and
Defendants acted wrongfully with regard to Plaintiffs'
alleged rescission. (TAC 39-41, 43, 46, 49, 74, 111,
135, 140, 146-47.) A claim for damages pursuant to
TILA is subject to a one-year statute of limitations,
which generally runs from the consummation of the
transaction at issue. 15 U.S.C. 1640(e); King v.
California, 784 F.2d 910, 915 (9th Cir. 1986). [*12]
Claims of rescission under TILA are subject to a
maximum three-year statute of limitations. 15 U.S.C.
1635(f)("An obligor's right of rescission shall expire
three years after the date of consummation of the
transaction or upon the sale of the property, whichever
occurs first, notwithstanding the fact that the information
and forms required under this section or any other
disclosures required under this part have not been
delivered to the obligor."); 12 C.F.R. 226.23(a)(3).
Plaintiffs' loan closed on or about November 18, 2005.
1. Litton and MTGLQ
Contrary to Plaintiffs' assertion, rescission under
TILA is not automatic unless the creditor acquiesces to
the rescission, which clearly did not occur here. Rather,
"rescission under 1635(b) is an ongoing process
consisting of a number of steps." Yamamoto v. Bank of
New York, 329 F.3d 1167, 1173 (9th Cir. 2003). "[U]nder
the statute and the regulation, the security interest
'becomes void' only when the consumer 'rescinds' the
transaction. In a contested case, this happens when the
right to rescind is determined in the borrower's favor."
Id. at 1172. Nonetheless, Plaintiffs allege their right to
rescind was extended to three years from [*13] the
consummation of the loan due to inadequate disclosures
under TILA and that they timely exercised their right to
rescind by notifying Defendants of their intent to rescind
in writing. (See, e.g., TAC 150(b).)
Litton and MTGLQ argue the TILA and rescission
claims fail as to them because they were not involved
with Plaintiffs' loan at the time of origination and were
therefore not obligated to make disclosures, Plaintiffs
lack standing to bring a rescission claim against them,
Plaintiffs did not send a timely rescission notice to them,
and the claims are time-barred. Plaintiffs allege "the
servicing of [the] loan had been transferred to Litton
Loan Service [sic]" from SPS in October 2008. (TAC
50(h).) MTGLQ did not become involved with the loan
until October 21, 2008, when all beneficial interest under
the Deed of Trust was transferred to it. (MTGLQ/Litton

RJN Ex. 2.) Litton and MTGLQ argue Plaintiffs, despite

alleging that they sent a notice of rescission to all
Defendants on February 5, 2007 (TAC 150(b)), could
not have provided such notice to them as they were not
yet involved with Plaintiffs' loan until it assumed the role
of servicer to Plaintiffs' loan in October 2008. [*14]
Plaintiffs also allege to have given notice of their
rescission "by and through this Complaint filed on
November 3, 2008." (Id. at 147(g).) Litton and
MTGLQ argue there are no allegations that they were
served with the November 2008 pleading and they were
not named as Defendants at that time. (Doc. 12-1 at pg.
85.) Rather, Plaintiffs served MTGLQ on September 16,
2009, and served Litton after it was named in the TAC,
filed on October 14, 2010. (Doc. 12.) Litton and
MTGLQ argue any notice they received of Plaintiffs'
rescission via service of the Complaint or a notice of
rescission was well beyond the three-year period of
rescission permitted under TILA. Litton and MTGLQ
further argue any claim by Plaintiffs for damages
asserted pursuant to TILA in the TAC is untimely under
the one-year statute of limitations applicable to such
claims, and any claim for rescission is untimely as to
them under the maximum three-year statute of
limitations for rescission.
Litton and MTGLQ's arguments are unpersuasive at
the motion to dismiss stage. Plaintiffs allege they sent
Defendants a timely notice of rescission and timely filed
a Complaint alleging facts in support of their claim to
rescission. [*15] Plaintiffs further allege, "[o]n June 12,
2009, plaintiff gave notice of this lawsuit and Notice of
Rescission to Goldman Sachs d/b/a MTGLQ Investors
L.P., therein disputing the amount of their alleged loan,
and duly delivered a Qualified Notice of Rescission to
Goldman Sachs via their subsidiary, Defendant MTGLQ
Investors, L.P." (TAC 66; Opp. Ex. VII.) Plaintiffs also
allege Litton responded to their notice of rescission and
qualified written request for information as to their loan
on March 9, 2009 and that "Plaintiff's qualified Notice of
Rescission was duly delivered to Defendant Select,
Defendant Litton, Defendant Goldman Sachs d/b/a/
MTGLQ Investors L.P. By [sic] certified return receipt
mail on over 16 separate occasions from February 5,
2007 until September 2009." (TAC 105, 111.) It is not
necessary for the Court to have finally determined
Plaintiffs' right to rescission within the three-year period,
nor for Plaintiffs to have given MTGLQ notice of their
claim to rescission within the three-year period, which
would have been incredibly difficult, if not impossible,
given Plaintiffs' Deed of Trust was assigned to MTGLQ
just weeks before the three-year period expired and
[*16] was not recorded until more than three years after
the consummation of Plaintiffs' loan. Rather, Plaintiffs'
allege they timely notified Defendants of their intent to
rescind; timely filed a Complaint alleging facts in

Page 7
2011 U.S. Dist. LEXIS 89049, *

support of their claim to rescission; subsequently notified

Defendants, including MTGLQ and Litton, of their claim
to rescission prior to the foreclosure sale of their
property; and Defendants acted improperly in light of
their knowledge of Plaintiffs' claim of rescission. These
allegations are sufficient to survive a motion to dismiss
as to a claim of rescission under TILA and for violations
of TILA in connection with the alleged rescission.
Moreover, Plaintiffs also allege a claim for
rescission pursuant to California Civil Code 1689(b)
(1) on the basis that Plaintiffs consent to the mortgage
was "obtained through duress, menace, fraud, or undue
influence." (See TAC 52, 60.) MTGLQ and Litton do
not address Plaintiffs' claim for rescission of the
mortgage on this basis. Accordingly, their motion to
dismiss Plaintiffs' claims for violation of TILA and for
rescission is denied.
2. Goldman
Goldman similarly argues there are no factual
allegations in the TAC demonstrating
[*17] that
Goldman was involved in the origination of the loan or
acted wrongfully with regard to Plaintiffs' purported
rescission of the loan. It further argues any claim
pursuant to TILA is time-barred as to it because no notice
of Plaintiffs' alleged rescission was given to Goldman
until October 14, 2010, more than five years after the
consummation of Plaintiffs' loan. As discussed above,
there are no allegations in the TAC that Goldman itself
received notice of Plaintiffs' intended rescission and
failed to respond appropriately, or that a loan exists from
Goldman to Plaintiffs to be rescinded. Accordingly,
Goldman's motion to dismiss this claim is granted.
C. Debt Collection Practices Acts
Plaintiffs allege Defendants violated the California
Rosenthal Fair Debt Collection Practices Act
("RFDCPA") by (1) "falsely stating the amount of a
debt," (2) "increasing the amount of a debt by including
amounts not permitted by law or contract," (3)
"improperly foreclosing upon the Subject Property," and
(4) "using unfair and unconscionable means in an
attempt to collect a debt." (TAC 152.) The RFDCPA
serves to "prohibit debt collectors from engaging in
unfair or deceptive acts or practices in the [*18]
collection of consumer debts and to require debtors to act
fairly in entering into and honoring such debts." Arikat v.
JP Morgan Chase & Co., 430 F. Supp. 2d 1013, 1026
(N.D. Cal. 2006)(citing Cal. Civ. Code 1788.1)
(emphasis omitted). However, the RFDCPA only governs
the conduct of a "debt collector," which under the statute
is defined as "any person who, in the ordinary course of
business, regularly, and on behalf of himself or herself or
others, engages in debt collection." Cal Civ. Code.

1788.2(c). Similarly, the Fair Debt Collection Practices

Act ("FDCPA") applies only to "debt collectors", as
defined by the statute. See 15 U.S.C. 1692a(6)(defining
"debt collector" as any person "who uses any
instrumentality of interstate commerce or the mails in
any business the principal purpose of which is the
collection of any debts, or who regularly collects or
attempts to collect, directly or indirectly, debts owed or
due or asserted to be owed or due another").
1. Litton and MTGLQ
Litton and MTGLQ argue Plaintiffs' claims for
violation of the RFDCPA and FDCPA fail because the
statutes do not apply to collection efforts related to
mortgage loans and the nonjudicial foreclosure process.
[*19] Although the Court has previously recognized
some criticism of the general rule in the Ninth Circuit
that mortgage foreclosure does not constitute debt
collection within the meaning of the Acts (see Feb. 22
Order at 5), the Court agrees with Defendants that the
general rule should apply here. See, e.g., Gardner v. Am.
Home Mortg. Serv., Inc., 691 F. Supp. 2d 1192, 1198
(E.D. Cal. 2010); Tina v. Countrywide Home Loans, Inc.,
08cv1233 JM (NLS), 2008 U.S. Dist. LEXIS 88302, 2008
WL 4790906, at *7 (S.D. Cal. Oct. 30, 2008). As
Plaintiffs' allegations of unfair debt collection practices
relate to their mortgage and the nonjudicial foreclosure
process, Litton and MTGLQ's motion to dismiss these
claims is granted.
2. Goldman
Goldman argues these claims should be dismissed as
to it because Plaintiffs have not alleged any facts
demonstrating Goldman is a "debt collector" within the
meaning of these statutes or that Goldman ever
attempted to collect any debt from Plaintiffs. Rather,
Plaintiffs only allege unspecified Defendants were noncompliant "with their obligations as Defendants and debt
collectors under the TILA." (TAC 136.) Goldman also
argues foreclosing on property does not constitute the
collection of a debt within [*20] the meaning of the
RFDCPA or the FDCPA. The Court agrees Plaintiffs
have not alleged any facts demonstrating Goldman
attempted to collect any debt from Plaintiffs.
Accordingly, Goldman's motion to dismiss this claim is
granted.
D. Wrongful Foreclosure
Plaintiffs bring a wrongful foreclosure claim against
Defendants SPS, MTGLQ Investors, LP, and Rick
Ardissoni. Litton and MTGLQ argue Plaintiffs' claims
for wrongful foreclosure, quiet title, to set aside the
trustee's deed, and to cancel the trust deed fail for the
same reasons that the TILA and rescission claims fail

Page 8
2011 U.S. Dist. LEXIS 89049, *

because Plaintiffs challenge the foreclosure and deed

upon sale on the basis that Plaintiffs rescinded the loan.
(TAC 158-72, 262-64, 314-35.) However, as stated
above, Defendants' motion to dismiss Plaintiffs' claims
for violation of TILA and rescission are denied.
Accordingly, Defendants' motions to dismiss Plaintiffs'
claim for wrongful foreclosure are also denied.
E. RESPA
Plaintiffs allege unspecified Defendants violated
RESPA by failing to provide a Servicing Statement at the
time of closing of their loan, failing to make corrections
to Plaintiffs' account, and by failing to adequately
respond to alleged qualified [*21] written requests
("QWR") submitted by Plaintiffs. (Id. at 177, 180.)
1. Litton and MTGLQ
Litton and MTGLQ argue Plaintiffs' claims under
RESPA fail because Plaintiffs do not make sufficient
factual allegations to state a plausible claim for relief and
because Plaintiffs do not allege to have suffered any
damages as a result of the alleged RESPA violations.
Under RESPA, a plaintiff may recover any actual
damages suffered as a result of the failure to provide the
required notice, as well as "any additional damages, as
the court may allow, in the case of a pattern or practice of
noncompliance with the requirements of this section, in
an amount not to exceed $1,000." 12 U.S.C. 2605(f)(1).
Litton and MTGLQ argue Plaintiffs' allegation that, as a
result of "Defendants' failure to comply with RESPA,
and regulation X, Plaintiffs have suffered and continue to
suffer damages and costs of suit," (TAC 194), does not
provide enough factual detail to state a plausible claim
that Plaintiffs were injured as a result of the RESPA
violations. However, Plaintiffs also allege "[a]s a direct
and proximate result of Defendants' failure to comply
with RESPA, Plaintiffs have suffered and continue to
[*22] suffer substantial economic damages including the
costs of litigating this suit." (Id. at 195.) These
allegations are sufficient to survive at the motion to
dismiss stage.
Plaintiffs allege "no party in interest provided any
information in response to . . . Plaintiff's February 5,
2009[,] March 2[,] 2009[,] and April 18[,] 2009,
Qualified Written Request (QWR) letters until March 9,
2009 when Defendant Litton Loan service contacted
Plaintiff in writing to say it would take up [to] 90 days to
investigate Plaintiff's demands for substantiation of
debt." (TAC 182; see id. at 50(I), 105.) As to
MTGLQ, Plaintiffs allege, "[o]n July 6, 2009 Defendant
Stephen C. Wichmann contacted plaintiff's [sic] to state
that Defendant MTGLQ would be unable to substantiate
plaintiffs' debt because it had no records of Plaintiffs'
mortgage loan transaction and or [sic] property and

suggested that Plaintiffs' [sic] contact Defendant

Goldman Sachs." (Id. at 183.) However, the July 6,
2009 letter from Wichmann submitted by Plaintiffs
indicates that it is from The Impac Companies in
response to a letter from Plaintiffs received by The
Impac Companies, which was addressed to MTGLQ-not
that it is a response [*23] from Wichmann on behalf of
MTGLQ, as Plaintiffs argue. (Opp. Ex. IV.) However,
Plaintiffs further allege they "delivered Qualified Written
Request letters disputing her debt[,] requesting
documents inquiring as to the disposition of her loan
funds, and therein disputing her debt with Defendant
Select, Defendant MTGLQ Investors L.P., Defendant
Litton Loan Service, and trustee sale company Quality
Loan Service." (TAC 50(k).) Accordingly, MTGLQ
and Litton's motion to dismiss Plaintiffs' claim under
RESPA is denied.
2. Goldman
As discussed above, Plaintiffs have not pled
sufficient allegations that Goldman was involved in the
origination of Plaintiffs' loan and, therefore, it had no
disclosure obligations at the time of closing. Plaintiffs
also do not include any allegations that they sent a QWR
to Goldman. Accordingly, Goldman's motion to dismiss
this claim is granted.
F. Breach of Contract
To state a claim for breach of contract, a plaintiff
must allege the existence of a contract, plaintiff's
performance or excuse for nonperformance, defendant's
breach, and damages as a result of the breach. CDF
Firefighters v. Maldonado, 158 Cal. App. 4th 1226,
1239, 70 Cal. Rptr. 3d 667 (2008).
1. Litton and MTGLQ
The TAC [*24] states the claim for breach of
contract is brought against "Defendants Select Portfolio
Servicing, and Goldman Sachs d/b/a MTGLQ Investors
L.P." (TAC at 65.). Nonetheless, Litton and MTGLQ
argue Plaintiffs have failed to allege sufficient facts as to
the contractual provision of the loan agreement that they
allegedly breached and have failed to sufficiently allege
they performed, or had an excuse for not performing,
their obligations under the alleged contract. Plaintiffs
allege unspecified Defendants breached their contract by
failing to "provide [Betty Bryan] with a sustainable loan
given her age and fixed income" and to "provide
verification of mortgage and substantiation of Betty
Bryan's mortgage debt." (Id. at 237.) The Court agrees
that Plaintiffs have failed to allege sufficient facts to
support a plausible claim for breach of contract as to
either MTGLQ or Litton. Accordingly, their motion to
dismiss this claim is granted.

Page 9
2011 U.S. Dist. LEXIS 89049, *

2. Goldman
It is not entirely clear whether Plaintiffs intended to
state a claim for breach of contract against Goldman, as
the TAC states the claim for breach of contract is brought
against "Defendants Select Portfolio Servicing, and
Goldman Sachs d/b/a [*25] MTGLQ Investors L.P." (Id.
at 65.). However, to the extent it is stated against
Goldman, Goldman argues it should be dismissed
because the purported contract is between Plaintiffs and
Novelle, the original lender. (See Id. at 46, 86, 234;
Goldman RJN Ex. 1.) Plaintiffs do not allege the
existence of a contract between them and Goldman.
Rather, they allege "Plaintiffs have been informed and
believe, and therefore allege, that they have never
entered into any agreement with Defendant Goldman
Sachs who d/b/a MTGLQ Investors L.P. who now claim
to ownership possession of their home [sic]." (TAC
106.) Accordingly, Goldman's motion to dismiss the
breach of contract claim is granted.
G. Breach of Implied Covenant of Good Faith and
Fair Dealing
Plaintiffs allege "[t]he documents in connection with
the Subject Loan, including without Limitation, the loan
agreement, promissory note and deed of trust, all include
an implied covenant of good faith and fair dealing."
(TAC 241.) They allege the loan itself "violated every
implied covenant of Good Faith and Fair Dealing." (Id.
at 59.) Plaintiffs further allege Defendants "breached
the implied covenant of good faith and fair dealing by,
among [*26] other things: a) Failing to put as much
consideration to Plaintiffs' interests as to Defendants'
interests. b) Initiating foreclosure proceedings on the
Subject Property despite not having the right to do so and
failing to comply with applicable California law. c)
Failing to provide proper notice before commencing a
wrongful foreclosure soon followed by eviction
proceedings." (Id. at 246.)
1. Litton and MTGLQ
Litton and MTGLQ argue this claim should be
dismissed as against them because the acts alleged by
Plaintiffs were authorized under the loan agreement
and/or California law and because the implied covenant
is limited to enforcing compliance with the express terms
of a contract. "Since the good faith covenant is an
implied term of a contract, the existence of a contractual
relationship is thus a prerequisite for any action for
breach of the covenant." Kim v. Regents of the Univ. of
Cal., 80 Cal. App. 4th 160, 164, 95 Cal. Rptr. 2d 10
(2000); see also Racine & Laramie, Ltd. v. Dep't of
Parks & Recreation, 11 Cal. App. 4th 1026, 1033, 14
Cal. Rptr. 2d 335 (1992)("If there exists a contractual

relationship between the parties, . . . the implied

covenant is limited to assuring compliance with the
express terms of the contract, [*27] and cannot be
extended to create obligations not contemplated in the
contract." (citations omitted)). Plaintiffs do not allege the
existence of a contractual relationship between them and
Litton. They do allege that MTGLQ "claims to be the
successor beneficiary of the promissory note secured by
the Property at issue," and attach a copy of the Corporate
Assignment of Deed of Trust transferring Plaintiffs' loan
to MTGLQ. (TAC 18, App. at 128.) However, they do
not allege what express provisions of the contract the
implied covenant of good faith and fair dealing applies
to.
To the extent Plaintiffs state a claim for a standalone
tort claim regarding the implied covenant of good faith
and fair dealing, they are required to show that they were
in a special or fiduciary relationship with Litton and
MTGLQ. See DuBarry Int'l, Inc. v. Southwest Forest
Ind., Inc., 231 Cal. App. 3d 552, 575 n.27, 282 Cal. Rptr.
181 (1991). However, for the reasons discussed herein,
they have failed to allege sufficient facts demonstrating
the existence of such a special relationship. Accordingly,
Litton and MTGLQ's motion to dismiss this claim is
granted.
2. Goldman
Goldman argues this claim should be dismissed as
against it because [*28] such a claim is limited to
assuring compliance with the express terms of a contract,
which it was not party to. As Plaintiffs have failed to
allege the existence of a contract between them and
Goldman, Goldman's motion to dismiss this claim is
granted.
H. Breach of Fiduciary Duty
Plaintiffs' allegations as to breach of fiduciary duty
are largely directed at behavior by Defendant Demarco
Fletcher. (See, e.g., TAC 197-200.) As to the other
Defendants, Plaintiffs allege, "[b]y failing TO COMPLY
WITH HER RESCISSION, All other Defendants . . .
aided and abetted in the breaches of the fiduciary duties
owed by Defendant Demarco Fletcher." (Id. at 200; see
also id. at 199 ("The other Defendants owed a duty not
to aid and abet the breach of fiduciary duty owed by
Defendant Demarco Fletcher.").)
1. Litton and MTGLQ
Litton and MTGLQ argue they owe no fiduciary
duty to Plaintiffs, citing two cases for the proposition that
a lender does not owe a fiduciary duty to a borrower in
the context of an ordinary lender-borrower relationship.
See Nymark v. Heart Fed. Sav. & Loan Ass'n, 231 Cal.

Page 10
2011 U.S. Dist. LEXIS 89049, *

App. 3d 1089, 1093 n.1, 283 Cal. Rptr. 53 (1991); Price

v. Wells Fargo Bank, 213 Cal. App. 3d 465, 476, 261
Cal. Rptr. 735 (1989). They argue this [*29] extends to a
servicer of a loan and a subsequent acquirer of a
mortgage debt without pointing to authority supporting
such claim. Nonetheless, the Court finds the allegations
in the TAC insufficient to state a plausible claim of a
fiduciary relationship between Plaintiffs and Litton and
MTGLQ. Accordingly, Defendants' motion to dismiss
this claim is granted.
2. Goldman
As discussed above, the TAC does not contain any
allegations of a relationship between Plaintiffs and
Goldman directly, let alone a relationship giving rise to a
fiduciary duty. Accordingly, Goldman's motion to
dismiss this claim is granted.
I. Fraud
Plaintiffs assert a claim for fraud-intentional
misrepresentation against several individual defendants
and a claim for fraud-negligent misrepresentation against
all Defendants. To recover for common law fraud under
California law, Plaintiffs must demonstrate: (1)
misrepresentation, (2) knowledge of its falsity, (3) intent
to defraud, (4) justifiable reliance, and (5) resulting
damage. Lazar v. Super. Ct., 12 Cal.4th 631, 638, 49 Cal.
Rptr. 2d 377, 909 P.2d 981 (1996). Unlike fraud,
negligent misrepresentation does not require knowledge
of falsity or intent to defraud. Small v. Fritz Cos., Inc.,
30 Cal.4th 167, 173-74, 132 Cal. Rptr. 2d 490, 65 P.3d
1255 (2003). [*30] Rather, negligent misrepresentation
may be shown when there is a false statement made by
"one who has no reasonable ground for believing it to be
true." Id. (citing Cal. Civ. Code 1710(2)). However,
both fraud and negligent misrepresentation claims are
subject to the heightened pleading standards of Federal
Rule of Civil Procedure 9(b). Neilson v. Union Bank of
Cal., N.A., 290 F. Supp. 2d 1101, 1141 (C. D. Cal. 2003).
Rule 9(b) requires a party alleging fraud or mistake to
"state with particularity the circumstances constituting
fraud or mistake" and is applied by a federal court to
both federal law and state law claims. Vess v. Ciba-Geigy
Corp. USA, 317 F.3d 1097, 1102-03 (9th Cir. 2003). A
pleading will be "sufficient under Rule 9(b) if it identifies
the circumstances of the alleged fraud so that the
defendant can prepare an adequate answer." Fecht v.
Price Co., 70 F.3d 1078, 1082 (9th Cir. 1995)(quotation
omitted). The same is true for allegations of fraudulent
conduct. Vess, 317 F.3d at 1103-04. In other words, fraud
allegations must be accompanied by "the who, what,
when, where, and how" of the misconduct charged. Id. at
1106 (quotation omitted).
Plaintiffs allege negligent misrepresentations [*31]

regarding three categories of information: (1) "the

Subject Loan", (2) "the true amount of the mortgage
debt", and (3) "ownership" of the promissory note. (TAC
221-22.)
1. Litton and MTGLQ
Litton and MTGLQ argue Plaintiffs' allegations are
not pled with the requisite particularity as to them. The
Court agrees Plaintiffs have failed to plead the elements
of a claim for fraud or negligent misrepresentation as to
Litton and MTGLQ with the requisite particularity.
Accordingly, their motion to dismiss Plaintiffs' claim for
fraud-negligent misrepresentation is granted.
2. Goldman
Goldman similarly argues Plaintiffs have failed to
allege fraud with the requisite particularity as to it. The
Court agrees. Plaintiffs do not allege any purported
statement or representation by Goldman to them, let
alone a misrepresentation. Accordingly, Goldman's
motion to dismiss this claim is granted.
J. California Business & Professions Code 17200
California law prohibits unfair competition, defined
as "any unlawful, unfair or fraudulent business act or
practice." Cal. Bus. & Prof. Code 17200. "Because
Business and Professions Code section 17200 is written
in the disjunctive, it established three varieties [*32] of
unfair competition-acts or practices which are unlawful,
unfair, or fraudulent." Cel-Tech Commc'ns, Inc. v. Los
Angeles Cellular Tel. Co., 20 Cal.4th 163, 180, 83 Cal.
Rptr. 2d 548, 973 P.2d 527 (1999)(citation omitted). "By
proscribing 'any unlawful' business practice, section
17200 borrows violations of other laws and treats them
as unlawful practices that the unfair competition law
makes independently actionable." Id. (citation and
internal quotations omitted). A business practice is
"fraudulent" within the meaning of 17200 if members
of the public are likely to be deceived. Prata v. Superior
Court, 91 Cal. App. 4th 1128, 1146, 111 Cal. Rptr. 2d
296 (2001)(citing Comm. on Children's Television v.
Gen. Foods Corp., 35 Cal.3d 197, 211, 197 Cal. Rptr.
783, 673 P.2d 660 (1983)). "[A]n 'unfair' business
practice occurs when that practice 'offends an established
public policy or when the practice is immoral, unethical,
oppressive, unscrupulous or substantially injurious to
consumers.'" Smith v. State Farm Mut. Auto. Ins. Co., 93
Cal. App. 4th 700, 719, 113 Cal. Rptr. 2d 399 (2001)
(quoting People v. Casa Blanca Convalescent Homes,
Inc., 159 Cal. App. 3d 509, 530, 206 Cal. Rptr. 164
(1984)).
1. Litton and MTGLQ

Page 11
2011 U.S. Dist. LEXIS 89049, *

Litton and MTGLQ argue this claim is based upon

the same conduct as Plaintiffs' first eight causes of action
[*33] and therefore fails for the same reasons. In so
arguing, Litton and MTGLQ focus solely on the
unlawful prong of 17200. However, Plaintiffs allege
"Defendants committed unlawful, unfair and/or
fraudulent business practices." (TAC 229.) Litton and
MTGLQ do not address the unfair and fraudulent
elements of 17200 and do not discuss whether
Plaintiffs have stated a plausible claim for relief under
either prong. Accordingly, Litton and MTGLQ's motion
to dismiss this claim is denied.
2. Goldman
Goldman argues the allegations in the TAC that
support Plaintiffs' claim for violation of 17200 relate to
the circumstances surrounding the origination of
Plaintiffs' loan, the resulting foreclosure, Plaintiffs'
attempt to rescind the loan, and the subsequent sale of
the property-all of which relate to actions taken by
others, not Goldman. As discussed above, the TAC
contains no allegations of conduct by Goldman directed
at Plaintiffs or in violation of a law, or of
misrepresentations made by Goldman to Plaintiffs.
Goldman's motion to dismiss this claim is granted.
K. California Civil Code 2923.5
Section 2923.5(c) requires a mortgagee, trustee,
beneficiary, or authorized agent who filed a notice [*34]
of default prior to the enactment of the section to include
a declaration with the notice of sale stating that it had
contacted the borrower to explore options to avoid
foreclosure or had attempted to contact the borrower.
Cal. Civ. Code 2923.5(c). However, here, Plaintiffs do
not include any allegations regarding the Notice of Sale.
Rather, Plaintiffs allege the "Declaration of compliance
with newly enacted Civil Code 2923.5 was attached to
plaintiffs['] default, falsely stated that Defendant Select
attempted to contact Plaintiff Betty Bryan to discuss her
financial situation to avoid foreclosure." (TAC 253.)
Plaintiffs also allege "Defendant MTGLQ's eviction of
Plaintiffs was wrongful pursuant to Defendant Select's
non-compliance with California Civil Code 2923.5." (Id.
at 255.) These allegations are insufficient to state a
claim for violtion of 2923.5 as to Defendants.
Furthermore, "the only remedy provided [by section
2923.5] is a postponement of sale before it happens."
Mehta v. Wells Fargo Bank, N.A., No. 10-CV-944 JLS
(AJB), 737 F. Supp. 2d 1185, 2010 WL 3385020, at *6
(S.D. Cal. Aug. 26, 2010)(quoting Mabry v. Super. Ct.,
185 Cal. App. 4th 208, 220-21, 110 Cal. Rptr. 3d 201
(2010)). Accordingly, Defendants' motions [*35] to
dismiss this claim are granted.

L. Quiet Title
Plaintiffs allege they "seek a quieting of title against
the trustee's deed upon sale which is the basis of legal
title claims by Defendant SELECT and Defendant
MTGLQ." (TAC 262.) To state a claim to quiet title,
"the complaint shall be verified" and must include all of
the following: (1) a legal description of the property and
its street address or common designation; (2) the title of
the plaintiff and the basis of the title; (3) the adverse
claims to the title of the plaintiff; (4) the date as of which
the determination is sought; and (5) a prayer for the
determination of the title of the plaintiff against the
adverse claims. Cal. Code Civ. Pro. 761.020.
1. Litton and MTGLQ
Litton and MTGLQ argue this claim should be
dismissed because it is dependent upon Plaintiffs'
challenge of the foreclosure process and deed upon sale
on the basis that Plaintiffs rescinded the loan. However,
for the reasons set forth above, Plaintiffs have stated a
plausible claim under TILA and for rescission.
Accordingly, motion to dismiss this claim is denied.
2. Goldman
There are no allegations in the TAC that Goldman
claims any right, title, or interest in [*36] Plaintiffs' loan
or that Goldman was involved in the foreclosure or
subsequent sale of the property. Moreover, Plaintiffs
allege MTGLQ is in possession of the note. Accordingly,
Goldman's motion to dismiss this claim is granted.
M. Elder Abuse
Financial abuse of an elder occurs when an entity
"[t]akes, secretes, appropriates, obtains, or retains real or
personal property of an elder or dependent adult for a
wrongful use or with intent to defraud, or both." Cal.
Welf. & Inst. Code 15610.30. In support of their claim
for elder abuse, Plaintiffs allege misrepresentations in the
loan origination and that Defendants engaged in a
wrongful foreclosure on the subject property in light of
their knowledge of Plaintiffs' alleged valid rescission.
(See TAC 65, 268-69.) Plaintiffs allege, "[s]ubsequent
to Betty Bryan's valid February 5, 2007 Notice of
Rescission, all the above Defendants herein named took,
secreted, appropriated and/or retained real or personal
property of elder Plaintiff Betty Bryan for a wrongful use
or with the intent to defraud, or both. Defendants' acts
were done in bad faith." (Id. at 269.)
1. Litton and MTGLQ
Litton Loan and MTGLQ argue Plaintiffs' alleged
rescission [*37] was not valid as to them for the reasons
set forth above and, therefore, any allegations of elder

Page 12
2011 U.S. Dist. LEXIS 89049, *

abuse as to them stemming from their allegedly unlawful

foreclosure upon Plaintiffs' property do not state a
plausible claim for relief. (See id. at 127-35.) For the
reasons discussed above, Plaintiffs' claims for rescission
survive Defendants' motion to dismiss and Litton and
MTGLQ's motion to dismiss Plaintiffs' claim for elder
abuse is therefore denied.
2. Goldman
Goldman argues Plaintiffs fail to allege it took,
appropriated, obtained, or retained or assisted in the
taking, appropriating, or obtaining of Plaintiffs' property
because all of the allegations in the TAC are as to actions
by Defendant Demarco Fletcher in the solicitation and
origination of Plaintiffs' loan, Plaintiffs' attempt to
rescind the loan, and the foreclosure. (Id. at 268-69,
271.) The Court agrees and Goldman's motion to dismiss
this claim is granted.
N. Set Aside Trustee's Sale and Cancel Trustee's Deed
1. Litton and MTGLQ
Litton and MTGLQ argue Plaintiffs' claims to set
aside the trustee's deed and to cancel the trust deed fail
for the same reasons that the TILA and rescission claims
fail because Plaintiffs [*38] challenge the foreclosure
and deed upon sale on the basis that Plaintiffs rescinded
the loan. (TAC 158-72, 262-64, 314-35.) For the
reasons set forth above, the motion to dismiss these
claims is denied.
2. Goldman
Goldman argues Plaintiffs' claims to set aside the
trustee's sale and to cancel the trustee's deed should be
dismissed because the TAC contains no allegations that
Goldman was involved in the transactions at issue. The
Court agrees and Goldman's motion to dismiss these
claims is granted.
O. Accounting

"To be entitled to an accounting, a plaintiff must

demonstrate at least one of the following: a breach of
fiduciary duty, fraud, or that the accounts are
complicated and there is a dispute as to whether the
money is owed." Miller v. Cal. Reconveyance Co., No.
10-CV-421 IEG (CAB), 2010 U.S. Dist. LEXIS 74290,
2010 WL 2889103, at *9-10 (S.D. Cal. July 22, 2010)
(citing Union Bank v. Super. Ct., 31 Cal. App. 4th 573,
593-94, 37 Cal. Rptr. 2d 653 (1995)). Plaintiffs here
allege they have not been provided with documents
substantiating the amount remaining on their mortgage,
but believe that certain amounts paid have not been
credited to their account and that the mortgage has not
been equitably reduced pursuant to their alleged
rescission. [*39] (See TAC 75, 77.) However, as
discussed above, Plaintiffs have not sufficiently stated a
claim for breach of fiduciary duty or fraud as to these
Defendants and have not alleged the account is so
complicated that a judicial accounting is necessary.
Accordingly, Litton, MTGLQ, and Goldman's motions to
dismiss the accounting claim are granted.
IV. CONCLUSION
For the foregoing reasons, Goldman's motion to
dismiss is granted in its entirety and Litton and
MTGLQ's motion to dismiss is granted in part and
denied in part. Because Plaintiffs have been given
sufficient opportunity to amend their Complaint and have
elected not to do so, no further opportunities for
amendment will be granted. Accordingly, the claims
dismissed herein are dismissed with prejudice. All
Defendants who have not yet filed an Answer to
Plaintiffs' TAC shall do so within fourteen days of the
entry of this Order.
IT IS SO ORDERED.
DATED: August 9, 2011
/s/ Dana M. Sabraw
HON. DANA M. SABRAW
United States District Judge

Page 14Page 14
2009 U.S. Dist. LEXIS 99355, *

4 of 100 DOCUMENTS
ANTHONY BUTERA, Plaintiff, vs. COUNTRYWIDE HOME LOANS, INC., et al,
Defendants.
CASE NO. CV F 09-1677 LJO SMS
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
CALIFORNIA
2009 U.S. Dist. LEXIS 99355
October 26, 2009, Decided
October 26, 2009, Filed
COUNSEL: [*1] For Anthony Butera, Plaintiff: Richard
Aguila Taguinod, LEAD ATTORNEY, Law Office
Richard A. Taguinod, Danville, CA.
For Countrywide Home Loans, Mortgage Electronic
Registration Systems, Inc., Recontrust Co., Defendants:
Michael Bryan Wall, LEAD ATTORNEY, Donald M.
Scotten, Akerman Senterfitt, LLP, Los Angeles, CA.
JUDGES: Lawrence J. O'Neill, UNITED STATES
DISTRICT JUDGE.

1 Defendants Countrywide Home Loans, Inc.

("Countrywide"),
Mortgage
Electronic
Registration Systems, Inc. ("MERS") and
ReconTrust Company, N.A. ("ReconTrust")
challenge plaintiff Anthony Butera's ("Mr.
Butera's") claims by their F.R.Civ.P. 12(b)(6)
[*2] motion. Countrywide, MERS and
ReconTrust will be referred to collectively as
"defendants." Mr. Butera also pursues claims
against defendant Fidelity National Title Co.
("Fidelity National") which has not appeared in
this action.

OPINION BY: Lawrence J. O'Neill

BACKGROUND
OPINION
Mr. Butera's Refinance Loan And Default
ORDER ON COUNTRYWIDE DEFENDANTS'
F.R.Civ.P. 12 MOTION TO DISMISS
(Doc. 7.)
INTRODUCTION
Several defendants 1 seek to dismiss as meritless and
barred by law and equity Mr. Butera's claims arising
from his defaulted loan to refinance his Modesto
residence ("property"). Mr. Butera filed no papers to
oppose dismissal of his claims. This Court considered
defendants' F.R.Civ.P. 12(b)(6) motion on the record and
VACATES the November 4, 2009 hearing, pursuant to
Local Rule 78-230(c), (h). For the reasons discussed
below, this Court DISMISSES this action against
defendants.

Mr. Butera executed an April 15, 2005 Adjustable

Rate Note ("note") payable in the amount of $ 372,000 to
Clarion Mortgage Capital, Inc. ("Clarion") to refinance
the property. Clarion secured the note with an April 15,
2005 Deed of Trust ("DOT") encumbering the property.
The DOT identifies Mr. Butera as borrower, Clarion as
lender, Fidelity National as Trustee, and MERS as
beneficiary. 2
2 Defendants note that MERS is a registry for
servicer and investor interests in residential
mortgage loans and serves in a nominal capacity
for its members as the mortgagee named in the
mortgage and public land records. Defendants
point out that MERS "is not a bank or lender of
any kind," "has not made or serviced a loan for
Mr. Butera, and has no responsibility for the

Page 15Page 15
2009 U.S. Dist. LEXIS 99355, *

allegations of the complaint." Defendants

attribute Countrywide, not MERS, to service Mr.
Butera's loan.

v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.

1990); Graehling v. Village of Lombard, Ill., 58 F.3d 295,
297 (7th Cir. 1995).

After Mr. Butera's loan closed, Countrywide

acquired the [*3] loan's servicing rights.

In resolving a F.R.Civ.P. 12(b)(6) motion, the court

must: (1) construe the complaint [*5] in the light most
favorable to the plaintiff; (2) accept all well-pleaded
factual allegations as true; and (3) determine whether
plaintiff can prove any set of facts to support a claim that
would merit relief. Cahill v. Liberty Mut. Ins. Co., 80
F.3d 336, 337-338 (9th Cir. 1996). Nonetheless, a court is
"free to ignore legal conclusions, unsupported
conclusions, unwarranted inferences and sweeping legal
conclusions cast in the form of factual allegations."
Farm Credit Services v. American State Bank, 339 F.3d
764, 767 (8th Cir. 2003) (citation omitted). A court need
not permit an attempt to amend a complaint if "it
determines that the pleading could not possibly be cured
by allegation of other facts." Cook, Perkiss and Liehe,
Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 247
(9th Cir. 1990). "While a complaint attacked by a Rule
12(b)(6) motion to dismiss does not need detailed factual
allegations, a plaintiff's obligation to provide the
'grounds' of his 'entitlement to relief' requires more than
labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do." Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 554, 127 S. Ct. 1955, 1964-65,
167 L. Ed. 2d 929 (2007) (internal [*6] citations
omitted). Moreover, a court "will dismiss any claim that,
even when construed in the light most favorable to
plaintiff, fails to plead sufficiently all required elements
of a cause of action." Student Loan Marketing Ass'n v.
Hanes, 181 F.R.D. 629, 634 (S.D. Cal. 1998). In practice,
"a complaint . . . must contain either direct or inferential
allegations respecting all the material elements necessary
to sustain recovery under some viable legal theory."
Twombly, 550 U.S. at 562, 127 S.Ct. at 1969 (quoting
Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101,
1106 (7th Cir. 1984)).

Mr. Butera defaulted on the loan, and Countrywide

initiated foreclosure of the property.
Mr. Butera's Claims
On June 24, 2009, Mr. Butera filed his original
verified complaint ("complaint") in Stanislaus County
Superior Court prior to defendants' removal to this Court.
The complaint appears to take issue with the origination
of Mr. Butera's loan and alleges a "predatory loan
scheme" to "lend more money than the borrower can
afford to pay," to pressure the borrower "to accept
higher-risk loans," and to strip "homeowners' equity . . .
by convincing him to refinance again and again." The
complaint alleges claims, which this Court will address
below, and seeks a declaration that "defendants hold no
interest" in the property, rescission of "the underlying
mortgage contracts and deeds of trust," an injunction to
prohibit the contemplated foreclosure/trustee's sale and
from evicting plaintiff, and special and punitive
damages.
DISCUSSION
F.R.Civ.P. 12(b)(6) Motion Standards
Defendants attack the complaint's claims as
"precluded by law" and for failure "to satisfy the tender
rule" and "to allege the requisite elements."
F.R.Civ.P. 8 requires a plaintiff to "plead a short [*4]
and plain statement of the elements of his or her claim,
identifying the transaction or occurrence giving rise to
the claim and the elements of the prima facie case."
Bautista v. Los Angeles County, 216 F.3d 837, 840 (9th
Cir. 2000).
A F.R.Civ.P. 12(b)(6) motion to dismiss is a
challenge to the sufficiency of the pleadings set forth in
the complaint. "When a federal court reviews the
sufficiency of a complaint, before the reception of any
evidence either by affidavit or admissions, its task is
necessarily a limited one. The issue is not whether a
plaintiff will ultimately prevail but whether the claimant
is entitled to offer evidence to support the claims."
Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40
L. Ed. 2d 90 (1974); Gilligan v. Jamco Development
Corp., 108 F.3d 246, 249 (9th Cir. 1997). A F.R.Civ.P.
12(b)(6) dismissal is proper where there is either a "lack
of a cognizable legal theory" or "the absence of sufficient
facts alleged under a cognizable legal theory." Balistreri

In Ashcroft v. Iqbal, U.S. , 129 S.Ct. 1937, 1949,

173 L. Ed. 2d 868 (2009), the U.S. Supreme Court
recently explained:
To survive a motion to dismiss, a
complaint must contain sufficient factual
matter, accepted as true, to "state a claim
to relief that is plausible on its face." . . .
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.
. . . Threadbare recitals of the
elements of a cause of action, supported
by mere conclusory statements, do not

Page 16Page 16
2009 U.S. Dist. LEXIS 99355, *

suffice. (Citation omitted.)

Moreover, [*7] a limitations defense may be raised

by a F.R.Civ.P. 12(b)(6) motion to dismiss. Jablon v.
Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980);
see Avco Corp. v. Precision Air Parts, Inc., 676 F.2d 494,
495 (11th Cir. 1982), cert. denied, 459 U.S. 1037, 103 S.
Ct. 450, 74 L. Ed. 2d 604 (1982). A F.R.Civ.P. 12(b)(6)
motion to dismiss may raise the limitations defense when
the statute's running is apparent on the complaint's face.
Jablon, 614 F.2d at 682. If the limitations defense does
not appear on the complaint's face and the trial court
accepts matters outside the pleadings' scope, the defense
may be raised by a motion to dismiss accompanied by
affidavits. Jablon, 614 F.2d at 682; Rauch v. Day and
Night Mfg. Corp., 576 F.2d 697 (6th Cir. 1978).
For a F.R.Civ.P. 12(b)(6) motion, a court generally
cannot consider material outside the complaint. Van
Winkle v. Allstate Ins. Co., 290 F.Supp.2d 1158, 1162, n.
2 (C.D. Cal. 2003). Nonetheless, a court may consider
exhibits submitted with the complaint. Van Winkle, 290
F.Supp.2d at 1162, n. 2. In addition, a "court may
consider evidence on which the complaint 'necessarily
relies' if: (1) the complaint refers to the document; (2) the
document is central to the [*8] plaintiff's claim; and (3)
no party questions the authenticity of the copy attached
to the 12(b)(6) motion." Marder v. Lopez, 450 F.3d 445,
448 (9th Cir. 2006). A court may treat such a document
as "part of the complaint, and thus may assume that its
contents are true for purposes of a motion to dismiss
under Rule 12(b)(6)." United States v. Ritchie, 342 F.3d
903, 908 (9th Cir.2003). Such consideration prevents
"plaintiffs from surviving a Rule 12(b)(6) motion by
deliberately omitting reference to documents upon which
their claims are based." Parrino v. FHP, Inc., 146 F.3d
699, 706 (9th Cir. 1998). 3 A "court may disregard
allegations in the complaint if contradicted by facts
established by exhibits attached to the complaint."
Sumner Peck Ranch v. Bureau of Reclamation, 823
F.Supp. 715, 720 (E.D. Cal. 1993) (citing Durning v.
First Boston Corp., 815 F.2d 1265, 1267 (9th Cir.1987)).
Moreover, "judicial notice may be taken of a fact to show
that a complaint does not state a cause of action." Sears,
Roebuck & Co. v. Metropolitan Engravers, Ltd., 245
F.2d 67, 70 (9th Cir. 1956); see Estate of Blue v. County
of Los Angeles, 120 F.3d 982, 984 (9th Cir. 1997). A
court properly may "'take [*9] judicial notice of matters
of public record outside the pleadings'" and consider
them for purposes of the motion to dismiss." Mir v. Little
Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988)
(citation omitted). As such, this Court may consider
plaintiffs' pertinent loan and foreclosure documents.

3
"We have extended the 'incorporation by
reference' doctrine to situations in which the
plaintiff's claim depends on the contents of a
document, the defendant attaches the document to
its motion to dismiss, and the parties do not
dispute the authenticity of the document, even
though the plaintiff does not explicitly allege the
contents of that document in the complaint."
Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir.
2005) (citing Parrino, 146 F.3d at 706).
Rescission
The complaint's first claim is entitled "Rescission
and/or Reformation of Contract" and alleges that
defendants "used misrepresentation and deceit, to lull
borrowers into real estate mortgage loans by steering
them into such loans that have low teaser adjustable
interests [sic] rates only and negative amortization that
quickly raise the monthly payments to an amount beyond
the
borrowers'
capacities
to
pay."
The
rescission/reformation [*10] claim "offers to restore
Defendants the subject property in return for defendants'
return to plaintiff all monies paid to defendants in
connection with the placement of the loans, service of
the loans, loan payments made, improvements made to
the property and other costs and expenses plaintiff has
incurred in the maintenance and upkeep of the subject
property."
Failure To Tender
Defendants challenge the rescission/reformation
claim's failure to allege that Mr. Butera "tendered the
amount due on the loan, which serves to bar almost all of
his claims." Defendants note that to maintain a challenge
to a foreclosure sale, "the borrower must actually pay, or
offer to pay the entire loan amount prior to the sale."
"A tender is an offer of performance made with the
intent to extinguish the obligation." Arnolds
Management Corp. v. Eischen, 158 Cal.App.3d 575, 580,
205 Cal.Rptr. 15 (1984) (citing Cal. Civ. Code, 1485;
Still v. Plaza Marina Commercial Corp., 21 Cal.App.3d
378, 385, 98 Cal.Rptr. 414 (1971). "A tender must be one
of full performance . . . and must be unconditional to be
valid." Arnolds Management, 158 Cal.App.3d at 580,
205 Cal.Rptr. 15.
A defaulted borrower is "required to allege [*11]
tender of the amount of [the lender's] secured
indebtedness in order to maintain any cause of action for
irregularity in the sale procedure." Abdallah v. United
Savings Bank, 43 Cal.App.4th 1101, 1109, 51
Cal.Rptr.2d 286 (1996), cert. denied, 519 U.S. 1081, 117
S. Ct. 746, 136 L. Ed. 2d 684 (1997). In FPCI RE-HAB
01 v. E & G Investments, Ltd., 207 Cal.App.3d 1018,

Page 17Page 17
2009 U.S. Dist. LEXIS 99355, *

1021, 255 Cal.Rptr. 157 (1989), the California Court of

Appeal has explained:
. . . generally "an action to set aside a
trustee's sale for irregularities in sale
notice
or
procedure
should
be
accompanied by an offer to pay the full
amount of the debt for which the property
was security." . . . . This rule . . . is based
upon the equitable maxim that a court of
equity will not order a useless act
performed. . . . "A valid and viable tender
of payment of the indebtedness owing is
essential to an action to cancel a voidable
sale under a deed of trust." . . . The
rationale behind the rule is that if
plaintiffs could not have redeemed the
property had the sale procedures been
proper, any irregularities in the sale did
not result in damages to the plaintiffs.
(Citations omitted.)

An action to set aside a foreclosure sale,

unaccompanied by an offer to [*12] redeem, does not
state a cause of action which a court of equity
recognizes. Karlsen v. American Sav. & Loan Assn., 15
Cal.App.3d 112, 117, 92 Cal.Rptr. 851 (1971). The basic
rule is that an offer of performance is of no effect if the
person making it is not able to perform. Karlsen, 15
Cal.App.3d at118, 92 Cal.Rptr. 851 (citing Cal. Civ.
Code, 1495.) Simply put, if the offeror "is without the
money necessary to make the offer good and knows it"
the tender is without legal force or effect. Karlsen, 15
Cal.App.3d at118, 92 Cal.Rptr. 851 (citing several cases).
Moreover, to obtain "rescission or cancellation, the
rule is that the complainant is required to do equity, as a
condition to his obtaining relief, by restoring to the
defendant everything of value which the plaintiff has
received in the transaction. . . . The rule applies although
the plaintiff was induced to enter into the contract by the
fraudulent representations of the defendant." Fleming v.
Kagan, 189 Cal.App.2d 791, 796, 11 Cal.Rptr. 737
(1961). "A valid and viable tender of payment of the
indebtedness owing is essential to an action to cancel a
voidable sale under a deed of trust." Karlsen, 15
Cal.App.3d at 117, 92 Cal.Rptr. 851.
"The [*13] rules which govern tenders are strict and
are strictly applied." Nguyen v. Calhoun, 105
Cal.App.4th 428, 439, 129 Cal.Rptr.2d 436 (2003). "The
tenderer must do and offer everything that is necessary
on his part to complete the transaction, and must fairly
make known his purpose without ambiguity, and the act
of tender must be such that it needs only acceptance by

the one to whom it is made to complete the transaction."

Gaffney v. Downey Savings & Loan Assn., 200
Cal.App.3d 1154, 1165, 246 Cal.Rptr. 421 (1988).
The absence of an allegation of ability to tender
amounts owed dooms the rescission/reformation claim.
Mr. Butera's inability to make monthly note payments
reflects inability to tender amounts owed to bar Mr.
Butera's requested rescission relief. Challenging
foreclosure is useless to render the rescission/reformation
claim meritless and subject to dismissal.
Unjust Remedy
Defendants further challenge rescission because the
complaint's allegations address lender Clarion, not
defendants. Defendants note that rescission is not
available "to the extent relief is sought against the party
who committed or participated in the misconduct alleged
to warrant rescission." "[W]hen the rights [*14] of
others have intervened and circumstances have so far
changed that rescission may not be decreed without
injury to those parties and their rights, rescission will be
denied and the complaining party left to his other
remedies." Gill v. Rich, 128 Cal.App.4th 1254, 1265, 28
Cal.Rptr.3d 52 (2005) (internal quotation marks omitted).
"[T]here can be no rescission where the rights of third
parties would be prejudiced." Gill, 128 Cal.App.4th at
1265, 28 Cal.Rptr.3d 52 (internal quotation marks
omitted) (plaintiff not entitled to rescission because such
relief would be unjust given that none of the defendants
subject to rescission relief were involved in the fraud and
when rescission would severely prejudice defendants'
rights).
Defendants are correct that their rights have
intervened to preclude Mr. Butera to rescind the note and
DOT. Defendants committed none of the wrongs which
support Mr. Butera's rescission claim. Lender Clarion
committed the alleged wrongs underlying Mr. Butera's
rescission claim. The complaint fails to allege that
defendants knew or had notice of Clarion's alleged
wrongs. Mr. Butera fails to demonstrate rescission is
available given that if rescission were awarded, [*15]
the interests of defendants, non-parties to Mr. Butera's
loan, would be severely prejudiced. Unjust prejudice to
defendants further warrants dismissal of the rescission
claim.
Failure To Restore
Defendants further challenge the rescission claim
based on Mr. Butera's failure to satisfy California Civil
Code section 1691 which requires a party seeking
rescission to "[r]estore to the other party everything of
value which he has received from him under the contract
or offer to restore the same upon condition that the other

Page 18Page 18
2009 U.S. Dist. LEXIS 99355, *

party do likewise, unless the latter is unable or positively

refuses to do so." "The consequence of rescission is . . .
the restoration of the parties to their former positions by
requiring each to return whatever consideration has been
received." Imperial Casualty & Indemnity Co. v.
Sogomonian, 198 Cal.App.3d 169, 184, 243 Cal.Rptr.
639 (1988).
Defendants note that the complaint "pretends to
fulfill the restoration requirement" by alleging that Mr.
Butera "offers to restore to Defendants the subject
property in return for defendants' return to plaintiff all
monies paid to defendants in connection with the
placement of the loans, service of the loans, loan
payments made, [*16] improvements made to the
property and other costs and expenses plaintiff has
incurred in the maintenance and upkeep of the subject
property."
Defendants are correct that Mr. Butera's "offer" is
invalid and pursues a windfall by seeking all monies
defendants received "in connection with" Mr. Butera's
loan. The rescission claim seeks to rob defendants of
their profits from servicing the loan. Moreover, the
complaint fails to allege facts to restore defendants to
their former position. Mr. Butera has not offered to return
the $ 372,000 he received under the note. Offering to
surrender the property does not satisfy the restoration
requirement of California Civil Code section 1691 to
further warrant dismissal of the rescission claim.
Reformation
Defendants note that the complaint's first claim
references reformation as a remedy without alleging facts
to satisfy reformation "requisites."
"A complaint for the reformation of a contract
should allege what the real agreement was, what the
agreement as reduced to writing was, and where the
writing fails to embody the real agreement. It is also
necessary to aver facts showing how the mistake was
made, whose mistake it was and what brought it about,
[*17] so that mutuality may appear." Lane v. Davis, 172
Cal.App.2d 302, 309, 342 P.2d 267 (1959).
The complaint's failure to allege reformation
elements dooms reformation relief and further warrants
dismissal of the complaint's first claim.
Fraud
The complaint's second claim is entitled "Fraud,
Deceit and Misrepresentation" and alleges that
defendants "committed fraud and deceit by not providing
the proper disclosures in this case since the plaintiff is a
lay person-homeowner." The claim further alleges that
Mr. Butera "was misled deliberately into believing that

he was entering into predatory loans with much lower

interest rate than was actually imposed."
Defendants fault the claim's "legally deficient"
allegations and failure to allege defendants'
misrepresentations.
The elements of a California fraud claim are: (1)
misrepresentation (false representation, concealment or
nondisclosure); (2) knowledge of the falsity (or
"scienter"); (3) intent to defraud, i.e., to induce reliance;
(4) justifiable reliance; and (5) resulting damage. Lazar
v. Superior Court, 12 Cal.4th 631, 638, 49 Cal.Rptr.2d
377, 909 P.2d 981 (1996). The same elements comprise a
cause of action for negligent misrepresentation, except
there [*18] is no requirement of intent to induce
reliance. Cadlo v. Owens-Illinois, Inc., 125 Cal. App. 4th
513, 519, 23 Cal. Rptr. 3d 1 (2004).
F.R.Civ.P. 9(b) requires a party to "state with
particularity the circumstances constituting fraud." 4 In
the Ninth Circuit, "claims for fraud and negligent
misrepresentation must meet Rule 9(b)'s particularity
requirements." Neilson v. Union Bank of California,
N.A., 290 F.Supp.2d 1101, 1141 (C.D. Cal. 2003). A court
may dismiss a claim grounded in fraud when its
allegations fail to satisfy F.R.Civ.P. 9(b)'s heightened
pleading requirements. Vess, 317 F.3d at 1107. A motion
to dismiss a claim "grounded in fraud" under F.R.Civ.P.
9(b) for failure to plead with particularity is the
"functional equivalent" of a F.R.Civ.P. 12(b)(6) motion to
dismiss for failure to state a claim. Vess, 317 F.3d at
1107. As a counter-balance, F.R.Civ.P. 8(a)(2) requires
from a pleading "a short and plain statement of the claim
showing that the pleader is entitled to relief."
4
F.R.Civ.P. 9(b)'s particularity requirement
applies to state law causes of action: "[W]hile a
federal court will examine state law to determine
whether the elements of fraud have been pled
sufficiently to [*19] state a cause of action, the
Rule 9(b) requirement that the circumstances of
the fraud must be stated with particularity is a
federally imposed rule." Vess v. Ciba-Geigy
Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003)
(quoting Hayduk v. Lanna, 775 F.2d 441, 443 (1st
Cir. 1995)(italics in original)).
F.R.Civ.P. 9(b)'s heightened pleading standard "is not
an invitation to disregard Rule 8's requirement of
simplicity, directness, and clarity" and "has among its
purposes the avoidance of unnecessary discovery."
McHenry v. Renne, 84 F.3d 1172, 1178 (9th Cir. 1996).
F.R.Civ.P. 9(b) requires "specific" allegations of fraud "to
give defendants notice of the particular misconduct
which is alleged to constitute the fraud charged so that
they can defend against the charge and not just deny that

Page 19Page 19
2009 U.S. Dist. LEXIS 99355, *

they have done anything wrong." Semegen v. Weidner,

780 F.2d 727, 731 (9th Cir. 1985). "A pleading is
sufficient under Rule 9(b) if it identifies the
circumstances constituting fraud so that the defendant
can prepare an adequate answer from the allegations."
Neubronner v. Milken, 6 F.3d 666, 671-672 (9th Cir.
1993) (internal quotations omitted; citing Gottreich v.
San Francisco Investment Corp., 552 F.2d 866, 866 (9th
Cir. 1997)). [*20] The Ninth Circuit Court of Appeals
has explained:
Rule 9(b) requires particularized
allegations
of
the
circumstances
constituting fraud. The time, place and
content of an alleged misrepresentation
may identify the statement or the
omission complained of, but these
circumstances do not "constitute" fraud.
The statement in question must be false to
be fraudulent. Accordingly, our cases have
consistently required that circumstances
indicating falseness be set forth. . . . [W]e
[have] observed that plaintiff must include
statements regarding the time, place, and
nature of the alleged fraudulent activities,
and that "mere conclusory allegations of
fraud are insufficient." . . . The plaintiff
must set forth what is false or misleading
about a statement, and why it is false. In
other words, the plaintiff must set forth an
explanation as to why the statement or
omission complained of was false or
misleading. . . .
In certain cases, to be sure, the
requisite particularity might be supplied
with great simplicity.
In re GlenFed, Inc. Securities Litigation, 42 F.3d 1541,
1547-1548 (9th Cir. 1994) (en banc) (italics in original)
superseded by statute on other grounds as stated in
Marksman Partners, L.P. v. Chantal Pharm. Corp., 927
F.Supp. 1297 (C.D. Cal. 1996); [*21] see Cooper v.
Pickett, 137 F.3d 616, 627 (9th Cir. 1997) (fraud
allegations must be accompanied by "the who, what,
when, where, and how" of the misconduct charged);
Neubronner, 6 F.3d at 672 ("The complaint must specify
facts as the times, dates, places, benefits received and
other details of the alleged fraudulent activity.")
As to multiple fraud defendants, a plaintiff "must
provide each and every defendant with enough
information to enable them 'to know what
misrepresentations are attributable to them and what
fraudulent conduct they are charged with.'" Pegasus

Holdings v. Veterinary Centers of America, Inc., 38

F.Supp.2d 1158, 1163 (C.D. Ca. 1998) (quoting In re
Worlds of Wonder Sec. Litig., 694 F.Supp. 1427, 1433
(N.D. Ca. 1988)). "Rule 9(b) does not allow a complaint
to merely lump multiple defendants together but
'require[s] plaintiffs to differentiate their allegations
when suing more than one defendant . . . and inform each
defendant separately of the allegations surrounding his
alleged participation in the fraud.'" Swartz v. KPMG LLP,
476 F.3d 756, 764-765 (9th Cir. 2007) (quoting Haskin v.
R.J. Reynolds Tobacco Co., 995 F.Supp. 1437, 1439
(M.D. Fla. 1998)). "In the context [*22] of a fraud suit
involving multiple defendants, a plaintiff must, at a
minimum, 'identif[y] the role of [each] defendant[] in the
alleged fraudulent scheme." Swartz, 476 F.3d at 765
(quoting Moore v. Kayport Package Express, Inc., 885
F.2d 531, 541 (9th Cir. 1989)).
Moreover, in a fraud action against a corporation, a
plaintiff must "allege the names of the persons who made
the allegedly fraudulent representations, their authority to
speak, to whom they spoke, what they said or wrote, and
when it was said or written." Tarmann v. State Farm
Mut. Auto. Ins. Co., 2 Cal.App.4th 153, 157, 2
Cal.Rptr.2d 861 (1991).
"[T]o establish a cause of action for fraud a plaintiff
must plead and prove in full, factually and specifically,
all of the elements of the cause of action. Conrad v. Bank
of America, 45 Cal.App.4th 133, 156, 53 Cal.Rptr.2d 336
(1996). There must be a showing "that the defendant
thereby intended to induce the plaintiff to act to his
detriment in reliance upon the false representation" and
"that the plaintiff actually and justifiably relied upon the
defendant's misrepresentation in acting to his detriment."
Conrad, 45 Cal.App.4th at 157, 53 Cal.Rptr.2d 336.
"Additionally, to establish [*23] fraud through
nondisclosure or concealment of facts, it is necessary to
show the defendant 'was under a legal duty to disclose
them.'" OCM Principal Opportunities Fund v. CIBC
World Mkts. Corp., 157 Cal.App.4th 835, 845, 68
Cal.Rptr.3d 828 (2007) (quoting Lingsch v. Savage, 213
Cal.App.2d 729, 735, 29 Cal.Rptr. 201 (1963).
The complaint fails to allege fraud elements and that
defendants engaged in fraud. The fraud claim does not
target defendants who had no duty to disclose loan
matters. Moreover, the complaint is severely lacking and
fails to satisfy F.R.Civ.P. 9(b) "who, what, when, where
and how" requirements. The complaint makes no effort
to allege specific misrepresentations or names of the
persons who made the allegedly fraudulent
representations, their authority to speak, to whom they
spoke, what they said or wrote, and when it was said or
written. The complaint lumps all defendants without
differentiating them. The fraud allegations do not target

Page 20Page 20
2009 U.S. Dist. LEXIS 99355, *

particular defendants, other than perhaps lender Clarion,

and the complaint's global approach is unsatisfactory.
The fraud claim's deficiencies are so severe to suggest no
potential improvement from an attempt to amend.
California Civil Code Section 2923.6
The [*24] complaint's third claim alleges that
"defendants ignored, failed and refused to work-out and
accept subject loans modified" in apparent violation of
California Civil Code section 2923.6 ("section 2923.6").
Defendants fault the claim in absence of a
requirement "to offer, let alone approve, loan
modifications." Section 2923.6(b) notes the Legislature's
intent that a mortgagee "offer the borrower a loan
modification or workout plan if such modification or
plan is consistent with it contractual or other authority."
"[N]othing in Cal. Civ.Code 2923.6 imposes a duty on
servicers of loans to modify the terms of loans or creates
a private right of action for borrowers." Farner v.
Countrywide Home Loans, 2009 U.S. Dist. LEXIS 5303,
2009 WL 189025, at *2 (2009).
The complaint fails to substantiate a cognizable
section 2923.6 claim.
Wrongful Foreclosure And Eviction
The complaint's fourth claim alleges that "the
threatened trustee's sale would be conducted wrongfully
and prematurely" in absence of defendants' "right to
foreclose." The complaint's fifth claim alleges that
"defendants' threatened and contemplated eviction of
herein plaintiff from his residential home must
necessarily be likewise wrongful, improper and
unlawful."
Defendants [*25] correctly attack the fourth and
fifth claims' failure to satisfy the tender rule discussed
above. Since the claims seek equitable relief, the tender
rule applies to defeat the claims.
Defendants note the absence of a cognizable
"wrongful threatened foreclosure" claim.
"Financing or refinancing of real property is
generally accomplished in California through a deed of
trust. The borrower (trustor) executes a promissory note
and deed of trust, thereby transferring an interest in the
property to the lender (beneficiary) as security for
repayment of the loan." Bartold v. Glendale Federal
Bank, 81 Cal.App.4th 816, 821, 97 Cal.Rptr.2d 226
(2000). A deed of trust "entitles the lender to reach some
asset of the debtor if the note is not paid." Alliance
Mortgage Co. v. Rothwell, 10 Cal.4th 1226, 1235, 44
Cal.Rptr.2d 352, 900 P.2d 601 (1995).
If a borrower defaults on a loan and the deed of trust

contains a power of sale clause, the lender may nonjudicially foreclose. See McDonald v. Smoke Creek Live
Stock Co., 209 Cal. 231, 236-237, 286 P. 693 (1930).
The California Court of Appeal has explained nonjudicial foreclosure under California Civil Code sections
2924-2924i:
The comprehensive statutory framework
established [*26] to govern nonjudicial
foreclosure sales is intended to be
exhaustive. . . . It includes a myriad of
rules relating to notice and right to cure. It
would be inconsistent with the
comprehensive and exhaustive statutory
scheme
regulating
nonjudicial
foreclosures to incorporate another
unrelated cure provision into statutory
nonjudicial foreclosure proceedings.
Moeller v. Lien, 25 Cal.App.4th 822, 834, 30 Cal.Rptr.2d
777 (1994).
Under California Civil Code section 2924(a)(1), a
"trustee, mortgagee or beneficiary or any of their
authorized agents" may conduct the foreclosure process.
Under California Civil Code section 2924b(b)(4), a
"person authorized to record the notice of default or the
notice of sale" includes "an agent for the mortgagee or
beneficiary, an agent of the named trustee, any person
designated in an executed substitution of trustee, or an
agent of that substituted trustee." "Upon default by the
trustor, the beneficiary may declare a default and proceed
with a nonjudicial foreclosure sale." Moeller, 25
Cal.App.4th at 830, 30 Cal.Rptr.2d 777.
A "trustee or mortgagee may be liable to the trustor
or mortgagor for damages sustained where there has
been an illegal, fraudulent or wilfully [*27] oppressive
sale of property under a power of sale contained in a
mortgage or deed of trust." Munger v. Moore, 11
Cal.App.3d 1, 7, 89 Cal.Rptr. 323 (1970).
The complaint lacks facts of foreclosure
irregularities or facts to support wrongful foreclosure to
warrant dismissal of the fourth claim.
Turning to wrongful eviction, defendants note the
absence of eviction without foreclosure.
A claim "for a threatened wrongful eviction is in
reality an action for malicious prosecution, an essential
element of which is a want of probable cause." Asell v.
Rodrigues, 32 Cal.App.3d 817, 824, n. 3, 108 Cal.Rptr.
566 (1973) (citing Gause v. McClelland, 102 Cal.App.2d
762, 764, 228 P.2d 91 (1951)). A "complaint for
malicious prosecution must allege malice, lack of
probable cause and a favorable termination of the prior

Page 21Page 21
2009 U.S. Dist. LEXIS 99355, *

proceedings." Scannell v. County of Riverside, 152

Cal.App.3d 596, 611, 199 Cal.Rptr. 644 (1984).
The complaint alleges no facts approximating a
malicious wrongful eviction to warrant dismissal of the
fifth claim.

intent to deceive the court. See Horsey v. Asher, 741 F.2d

209, 212 (8th Cir. 1984). An attempt to vex or delay
provides further grounds to dismiss this action.
CONCLUSION AND ORDER
For the reasons discussed above, this Court:

Special And Punitive Damages

The complaint's sixth claim is entitled "Special and
Punitive Damages" and references several federal and
California statutes on debt collection and foreclosure.
[*28] The claim appears to seek special and punitive
damages based on alleged violation of the statutes. None
of the cited statutes support a claim against defendants
for special or punitive damages. The complaint's mere
mention of statutes gives rise to no claim to warrant
dismissal of the sixth claim.
Attempt At Amendment And Malice
Mr. Butera's claims are insufficiently pled and
barred as a matter of law. Mr. Butera is unable to cure his
claims by allegation of other facts and thus is not granted
an attempt to amend.
Moreover, this Court is concerned that Mr. Butera
has brought this action in absence of good faith and that
Mr. Butera exploits the court system solely for delay or
to vex defendants. The test for maliciousness is a
subjective one and requires the court to "determine the . .
. good faith of the applicant." Kinney v. Plymouth Rock
Squab Co., 236 U.S. 43, 46, 35 S. Ct. 236, 59 L. Ed. 457
(1915); see Wright v. Newsome, 795 F.2d 964, 968, n. 1
(11th Cir. 1986); cf. Glick v. Gutbrod, 782 F.2d 754, 757
(7th Cir. 1986) (court has inherent power to dismiss case
demonstrating "clear pattern of abuse of judicial
process"). A lack of good faith or malice also can be
inferred from a complaint containing untrue material
[*29] allegations of fact or false statements made with

1. DISMISSES with prejudice this

action against defendants;
2. DIRECTS the clerk to enter
judgment against plaintiff Anthony Butera
and in favor of defendants Countrywide
Home Loans, Inc., Mortgage Electronic
Registration Systems, Inc. and Recontrust
Company, N.A.;
3. ORDERS Mr. Butera, no later than
November 4, 2009, to file papers to show
cause why this Court should not dismiss
this action against defendant Fidelity
National Title Co.; and
4. ADMONISHES Mr. Butera that
this Court will dismiss this action
against defendant Fidelity National
Title Co. if Mr. Butera fails to comply
with this order and fails to file timely
papers to show cause why this Court
should not dismiss this action against
defendant Fidelity National Title Co.

IT IS SO ORDERED.
Dated: October 26, 2009
/s/ Lawrence J. O'Neill
UNITED STATES DISTRICT JUDGE

Page 23Page 23
2004 Cal. App. Unpub. LEXIS 7947, *

5 of 100 DOCUMENTS
MARGARET FRANCIS, Plaintiff and Appellant, v. ALBERT FRANCIS et al.,
Defendants and Respondents.
C044773
COURT OF APPEAL OF CALIFORNIA, THIRD APPELLATE DISTRICT
2004 Cal. App. Unpub. LEXIS 7947
August 30, 2004, Filed
NOTICE:
[*1] NOT TO BE PUBLISHED IN
OFFICIAL REPORTS. CALIFORNIA RULES OF
COURT, RULE 977(a), PROHIBIT COURTS AND
PARTIES FROM CITING OR RELYING ON
OPINIONS NOT CERTIFIED FOR PUBLICATION OR
ORDERED PUBLISHED, EXCEPT AS SPECIFIED BY
RULE 977(B). THIS OPINION HAS NOT BEEN
CERTIFIED FOR PUBLICATION OR ORDERED
PUBLISHED FOR THE PURPOSES OF RULE 977.
PRIOR HISTORY:
Superior Court of Sacramento
County, No. 01AS05579.
JUDGES: NICHOLSON, J.; SIMS, Acting P.J., DAVIS,
J. Concurred.
OPINION BY: NICHOLSON
OPINION
Plaintiff Margaret Francis sued her son, defendant
Albert Francis, for breach of contract, common counts,
fraud, judicial foreclosure and quiet title, rescission, and
wrongful eviction. Plaintiff filed a notice of lis pendens
against property in Citrus Heights and Orangevale.
However, the court expunged the lis pendens. Defendant
filed a motion for summary judgment on all six causes of
action. 1
1
Although Albert Francis's former spouse,
Rosemarie Loop, was also a defendant in the
underlying action and is named as a respondent,
we need not refer to her separately in this
opinion. "Defendant" therefore refers to Albert
Francis. We also note that Loop has made no
appearance in this court. This lack of response is

of no consequence, however, because plaintiff's

contentions of error are without merit. (See In re
Bryce C. (1995) 12 Cal.4th 226, 232-233 [we
reverse only for prejudicial error, even when
respondent does not file brief].)
[*2] The trial court denied the motion for summary
judgment as to the breach of contract, common counts,
and fraud causes of action, finding triable issues of
material fact. The court granted summary judgment on
the judicial foreclosure and quiet title cause of action and
rescission cause of action because the undisputed facts
showed that defendant no longer held title to the property
and both properties had been sold to buyers who were
not parties to the action. The trial court granted summary
judgment on the wrongful eviction cause of action
because the undisputed facts established plaintiff was
lawfully evicted pursuant to an unlawful detainer action.
The case proceeded to jury trial on the first, second, and
third causes of action, and the jury returned verdicts for
the defendant on all three.
On appeal, plaintiff contends: (1) the court erred by
refusing plaintiff's proffered jury instruction based on
Civil Code section 1040; (2) the court erred by refusing
plaintiff's proffered jury instruction based on Civil Code
section 1148; (3) the trial court abused its discretion in
refusing to admit evidence of the notarial documentation
of defendant's [*3] deal with plaintiff; (4) the court
committed reversible error in granting defendant's
motion for summary judgment on plaintiff's judicial
foreclosure and quiet title cause of action and rescission
cause of action; and (5) the court committed reversible
error in granting defendant's motion for summary
judgment on plaintiff's wrongful eviction cause of action.
We affirm.

Page 24Page 24
2004 Cal. App. Unpub. LEXIS 7947, *

FACTS
These facts are derived from trial evidence
construed in a light most favorable to the verdicts. As
will be seen, plaintiff's contentions concerning the
summary judgment proceedings do not require a separate
recitation of facts provided during those proceedings.
In 1990, defendant purchased an undeveloped lot in
Citrus Heights for $ 170,000. He paid $ 30,000 as a
down payment and signed a deed of trust on the property,
securing a $ 140,000 loan. Defendant intended to
subdivide the property, build homes, and sell the homes
for profit. He also intended to provide his mother with a
home on one of four divided lots at the cost she was
paying to rent her apartment.
On December 7, 1993, defendant signed a grant
deed over to plaintiff for the property designated as 6715
Sunrise Boulevard in Citrus Heights. [*4] At that time,
6715 Sunrise Boulevard remained undeveloped.
Defendant verbally conditioned the deed on plaintiff
obtaining financing to cover the existing $ 85,000
encumbrance on the property. Defendant told plaintiff
not to record the deed until she had financing because an
acceleration clause would require a balloon payment to
become due. Plaintiff was unable to obtain financing.
Discouraged, she left town for several months, beginning
in June 1994. Plaintiff did not tell defendant where she
was going.
On June 27, 1994, defendant signed a grant deed
over to his former spouse, Rosemarie Loop, for the same
quarter lot, 6715 Sunrise Boulevard. Loop recorded the
June 27, 1994, grant deed the same day, causing the
acceleration clause on the deed of trust to be activated.
Loop began the process of obtaining financing to cover
the note against 6715 Sunrise Boulevard.
On August 8, 1994, while Loop's financing was in
escrow, plaintiff recorded the December 7, 1993 grant
deed. Plaintiff testified she recorded the deed without
financing because defendant told her she had no claim to
the property, but someone in a legal aid office told her
she had an interest in the property. This subsequently
[*5] created a cloud over Loop's title and delayed
escrow because the lender required a clean title before it
would provide financing. The creditor threatened
foreclosure if escrow did not close.
Defendant asked plaintiff to sign a grant deed over
to Loop to clean the title. After title company agents
explained the situation, plaintiff signed a grant deed
conveying 6715 Sunrise Boulevard to Loop on
December 22, 1994. Loop recorded the grant deed from
plaintiff on January 23, 1995. Thereafter, Loop sold 6715
Sunrise Boulevard. Defendant assured plaintiff he still
intended to build a house in which she could live for

approximately the amount of rent she was paying.

Defendant eventually completed his Citrus Heights
project, realizing no profits.
In 1997, defendant purchased a lot in Orangevale for
$ 26,000. The lot was later designated as 8712 Windshire
Lane. Defendant borrowed money and began building a
home. As the home neared completion, defendant
contacted plaintiff and told her that if she was willing to
pay the monthly mortgage of $ 625.38 (principal and
interest only) she could live in the house.
Plaintiff moved into the home in early 1998. When
the second mortgage payment became [*6] due, plaintiff
refused to pay until they renegotiated the agreement.
Plaintiff told defendant she wanted a grant deed.
Defendant refused and explained the acceleration clause
would cause a balloon payment to become due upon the
transfer of ownership. Defendant signed a document
promising to give plaintiff $ 60,000 if she made the
mortgage payments on 8712 Windshire Lane. There was
no stated interest or a date when $ 60,000 would be due.
Plaintiff made sporadic mortgage payments, often
late, and defendant was required to make payments she
missed. Beginning sometime in 1999, defendant made all
of the remaining payments. A few months later, January
25, 2000, defendant wrote a letter to plaintiff explaining
she could continue to live in the house rent free on the
condition defendant's brother Ed and plaintiff leave
defendant alone. Defendant testified the harassment by
plaintiff and Ed immediately intensified, in violation of
the conditions stated in the letter. Defendant also testified
he did not immediately evict his mother in reliance on
the breach of the conditions in his letter because she was
his mother.
Eventually, the burden of paying his own mortgage,
plaintiff's mortgage, [*7] and other expenses became too
much. On June 15, 2001, defendant filed an unlawful
detainer action to have plaintiff evicted from 8712
Windshire Lane on grounds of non-payment of rent. A
court entered judgment in favor of defendant and denied
plaintiff's request for stay of execution. Sheriff's deputies
evicted plaintiff.
Defendant sold the Windshire property for $ 220,000
in January 2002. He never gave plaintiff any money from
the sale of the property.
DISCUSSION
I
Proffered Instructions
Plaintiff contends the trial court committed
instructional error by refusing her proffered instructions
based on Civil Code sections 1040 and 1148. The

Page 25Page 25
2004 Cal. App. Unpub. LEXIS 7947, *

contention is without merit.

A. Background
Plaintiff submitted two jury instructions. The first
proposed instruction was based on Civil Code section
1040 2 and stated: "Consideration is not necessary to
constitute a valid Deed." The second proposed
instruction was based on Civil Code section 1148 and
provided: "[A] gift, once given, cannot be revoked by the
giver." 3
2
Civil Code section 1040 provides: "A
voluntary transfer is an executed contract, subject
to all rules of law concerning contracts in
general; except that a consideration is not
necessary to its validity."
[*8]
3 Civil Code section 1148 provides: "A gift,
other than a gift in view of impending death,
cannot be revoked by the giver."
After hearing argument from both sides, the trial
court refused both instructions. The trial court refused
the Civil Code section 1040 instruction because
"adequate consideration" was not an issue relevant to the
jury's determinations. The trial court refused the Civil
Code section 1148 instruction because the proposed
instruction would not have given a complete and
accurate view of the law relevant to the facts of the case.
The trial court reasoned that "to state that a gift cannot be
revoked by the giver would actually give a
misinterpretation because to give a full instruction, it
would have to be [']cannot be revoked by the giver[']
unless, in fact, in the donated document or instrument or
agreement there were conditions that were express that
would then have to be withdrawn. And if those were
withdrawn then, in fact, the gift itself could be
withdrawn.'" The court further explained that the
proposed [*9] instructions were unnecessary because of
the other instructions the court intended to give
concerning the validity of a transfer and the failure of a
condition.
B. Analysis
"The judge has a duty to instruct or 'charge' the
jury. . . . And a party has a right to instructions on his
theory of the case, if it is reasonable and finds support in
the pleadings and evidence or any inference that may be
properly drawn from the evidence." (7 Witkin, Cal.
Procedure (4th ed. 1997) Trial, 270, p. 317, italics in
original.) The court may refuse a proposed instruction
that is incomplete or misleading. (Id. at p. 318.)
"Instructional error requires reversal only '"where it
seems probable" that the error "prejudicially affected the

verdict."' [Citation.] The reviewing court should consider

not only the nature of the error, 'including its natural and
probable effect on a party's ability to place his full case
before the jury,' but the likelihood of actual prejudice as
reflected in the individual trial record, taking into
account '(1) the state of the evidence, (2) the effect of
other instructions, (3) the effect of counsel's [*10]
arguments, and (4) any indications by the jury itself that
it was mislead.'" (Rutherford v. Owens-Illinois, Inc.
(1997) 16 Cal.4th 953, 983.) Reversal is required "'"only
when the [reviewing] court after an examination of the
entire cause, including the evidence, is of the 'opinion'
that it is reasonably probable that a result more favorable
to the appealing party would have been reached in the
absence of the error."'" (Soule v. General Motors
Corporation (1994) 8 Cal.4th 548, 576.)
1. Civil Code section 1040
With respect to the Civil Code section 1040
instruction concerning the necessity for consideration,
plaintiff contends: "The instruction was proposed
because of the constant theme of [defendant] that
[plaintiff] gave nothing and therefore deserved nothing."
But the court recognized defendant's argument was that
there was a gift subject to a condition, thus consideration
was irrelevant. When plaintiff failed to satisfy the
condition, the gift failed. The trial court did not err in
refusing to give the proffered jury instruction because the
dispute was not over whether consideration was required
[*11] but instead over whether the condition had been
satisfied.
2. Civil Code section 1148
The second proffered jury instruction concerning
revocation of a gift was based on Civil Code section
1148. The trial court appropriately found that the
instruction, as proposed, was incomplete and therefore
misleading. The dispute focused on whether plaintiff
satisfied the condition to receive the gift, not on whether
defendant was trying to revoke the gift. Therefore, since
plaintiff did not proffer a complete and accurate
instruction under the facts, the trial court did not err in
refusing the proposed instruction. The trial court also
determined that other instructions proffered by plaintiff
and accepted by the court would adequately inform the
jury concerning the applicable law. Plaintiff, however,
makes no attempt on appeal to refute this statement.
Therefore, plaintiff has failed to show error.
II
Hearsay Evidence
Plaintiff asserts the trial court abused its discretion
when it refused to admit evidence of notarial

Page 26Page 26
2004 Cal. App. Unpub. LEXIS 7947, *

documentation. The assertion fails.

During her testimony, plaintiff sought to admit
exhibit 10, the notarial record [*12] of defendant's
February 17, 1998, transaction with plaintiff. Exhibit 10
was a page from the notary's book containing defendant's
signature, his license number, social security number,
fingerprint, and the term "Short Form Deed." 4 The
notary filled out the document, except for defendant's
signature. Plaintiff sought to admit exhibit 10 in lieu of
the missing document it memorialized. Defendant's
hearsay objection was sustained.
4
Plaintiff apparently contends this was
evidence that defendant signed a grant deed
giving her an interest in the Windshire property.
Defendant responds that "short form deed"
referred to a short form deed of trust and
assignment of rents, not a grant deed.
Subsequently, plaintiff's counsel sought testimony
from plaintiff regarding the contents of the missing
document. Again, defendant objected on hearsay
grounds. Plaintiff argued: "It's really to prove the thing
exists and what it is" and "to prove the existence of the
agreement." The court noted the existence of the
agreement was [*13] not contested and "the out-of-court
document statement offered to prove the truth of what is
being said . . . [is] classic hearsay." Defendant's hearsay
objection was sustained.
On appeal, plaintiff contends the trial court should
have admitted the notarial documentation as an adoptive
admission. She claims that, by signing the notary book,
defendant adopted as his own the statements written by
the notary. The contention fails because plaintiff did not
raise this argument in the trial court. She argued only that
the statements in the notary book were not hearsay. We
will not reverse a judgment based on a evidentiary
contention not made at trial. (Evid. Code, 354; People
v. Marks (2003) 31 Cal.4th 197, 228.)
III
Granting of Summary Judgment
Plaintiff argues the trial court erred in granting
defendant's motion for summary judgment on the judicial
foreclosure and quiet title, rescission, and wrongful
eviction causes of action. We conclude the trial court
acted properly because defendant (and Loop) no longer
owned the property and there has already been a judicial
determination that plaintiff was not wrongfully evicted.
On [*14] June 15, 2001, defendant filed an
unlawful detainer action against plaintiff. In response,
plaintiff filed an answer admitting all of the statements in
the complaint with specific exceptions. In so doing,

plaintiff admitted defendant was the owner of 8712

Windshire Lane and denied she had a month-to-month
tenancy with rent of $ 625 per month. A judgment in
favor of defendant Albert Francis (defendant here, but
plaintiff in the unlawful detainer action) was entered.
Subsequently, plaintiff filed the present action. On
the same day, plaintiff filed a notice of lis pendens
against both 6715 Sunrise Boulevard and 8712
Windshire Lane. The trial court granted defendant's
motion to expunge lis pendens as to 8712 Windshire
Lane, citing the unlawful detainer judgment and
plaintiff's failure to provide documentary evidence
"supporting her entitlement to ownership of the subject
property." The trial court granted defendant's motion to
expunge lis pendens as to 6715 Sunrise Boulevard
because "plaintiff has not established the probable
validity of her claim for rescission against" Loop and the
claim was barred by the statute of limitations. Both
properties were sold after the lis pendens was [*15]
expunged.
"In moving for summary judgment, a 'defendant . . .
has met' his 'burden of showing that a cause of action has
no merit if' he 'has shown that one or more elements of
the cause of action . . . cannot be established, or that
there is a complete defense to that cause of action. Once
the defendant . . . has met that burden, the burden shifts
to the plaintiff . . . to show that a triable issue of one or
more material facts exists as to that cause of action or a
defense thereto. . . . (Code Civ. Proc., 437c. subd. (o)
(2).)" (Aguilar v. Atlantic Richfield Co. (2001) 25
Cal.4th 826, 849.)
We independently review the record to determine
whether a triable issue of material fact exists. (Benavidez
v. San Jose Police Dept. (1999) 71 Cal.App.4th 853,
859.) We consider "'all of the evidence set forth in the
[supporting and opposition] papers, except that to which
objections have been made and sustained by the court . . .
.'" (Artiglio v. Corning Inc. (1998) 18 Cal.4th 604, 612.)
"In ruling on the motion, the court must 'consider all of
the evidence' and 'all' of the 'inferences' reasonably
drawn therefrom [*16] [citation], and must view such
evidence [citation] and such inferences [citation], in the
light most favorable to the opposing party." (Aguilar v.
Atlantic Richfield Co., supra, 25 Cal.4th at p. 843.)
A. Quiet Title and Rescission
As noted, the trial court granted summary judgment
as to the quiet title and rescission causes of action
because the properties had already been sold to buyers
who are not parties to this action. Plaintiff asserts the
granting of summary judgment on these causes of action
was error because it foreclosed application of equitable
remedies such as a resulting trust and disgorgement of

Page 27Page 27
2004 Cal. App. Unpub. LEXIS 7947, *

unjust enrichment. Although plaintiff cites cases

describing these equitable remedies (see, e.g., Marvin v.
Marvin (1976) 18 Cal.3d 660, 684, 134 Cal. Rptr. 815,
cited by plaintiff, describing equitable remedies between
nonmarital partners), she offers no authority for her
proposition that the prior sale of property to a third party
does not render unsound causes of action for quiet title
and rescission. Furthermore, plaintiff has not named the
buyers of the properties as parties to this action or
requested an equitable decree setting [*17] aside the sale
of the properties to third parties. (See Sierra-Bay Fed.
Land Bank Assn. v. Superior Court (1991) 227 Cal. App.
3d 318, 337, 277 Cal. Rptr. 753.) Accordingly, the trial
court was correct in determining that plaintiff could not
recover her alleged ownership of these properties in this
action. Although she later failed to prove her case at trial,
summary judgment did not leave plaintiff without
recourse for her alleged legal injuries. She still had her
contract and fraud causes of action.
On appeal, the appellant bears the burden to show
error in the trial court judgment and to cite authority
supporting the argument. "The appellant must present
argument and authorities on each point to which error is
asserted, or else the issue is waived. (Tiernan v. Trustees
of Cal. State University & Colleges (1982) 33 Cal.3d
211, 216, fn. 4, 188 Cal. Rptr. 115.)" (Kurinij v. Hanna &
Morton (1997) 55 Cal.App.4th 853, 865.) Since she
offers no authority to support her contention that the trial
court should have denied summary judgment on the quiet
title and rescission causes of action and allowed plaintiff
the chance to receive equitable [*18] remedies, she has
waived the contention and we need not consider it
further.
B. Wrongful Eviction
"As generally understood, 'the doctrine of res
judicata gives certain conclusive effect to a former
judgment in subsequent litigation involving the same
controversy.' [Citations.] The doctrine 'has a double
aspect.' [Citation.] 'In its primary aspect,' commonly
known as claim preclusion, it 'operates as a bar to the
maintenance on the same cause of action. [Citation.]'
[Citation.] . . . 'The prerequisite elements for applying the
doctrine to either an entire cause of action or one or more
issues are the same: (1) A claim or issue raised in the
present action is identical to a claim or issue litigated in a
prior proceeding; (2) the prior proceeding resulted in a
final judgment on the merits; and (3) the party against
whom the doctrine is being asserted was a party or in
privity with a party to the prior proceeding. [Citations.]'
[Citation.]" (People v. Barragan (2004) 32 Cal.4th 236,
252-253, italics omitted.)
Plaintiff contends she was wrongfully evicted as the
owner of 8712 Windshire Lane. Plaintiff's contention is

without merit and barred by res judicata. [*19] First, in

answering the defendant's unlawful detainer complaint,
plaintiff admitted defendant was the owner of 8712
Windshire Lane. Plaintiff checked the box stating
"Defendant [Margaret Francis, plaintiff here] admits that
all of the following statements of the complaint are true
EXCEPT." She did not deny paragraph 3 of the unlawful
detainer complaint, which stated: "Plaintiff's [Albert
Francis, defendant here] interest in the premises is as
owner." Both plaintiff and defendant were parties to the
unlawful detainer action which resulted in a final
judgment in favor of Albert Francis, defendant here.
Therefore, the lawfulness of the eviction was adjudicated
and has preclusive effect in this litigation.
Simplistically, plaintiff argues that the unlawful
detainer judgment cannot be given preclusive effect
because an unlawful detainer action does not get into
issues of ownership. (See High v. Cavanaugh (1962) 205
Cal. App. 2d 495, 498, 23 Cal. Rptr. 121 [holding that
broad question of title cannot be interposed as
affirmative defense in unlawful detainer action].) Thus, it
has been held that the losing party in an unlawful
detainer action is not precluded from [*20] maintaining
an action to quiet title. (Byrne v. Baker (1963) 221 Cal.
App. 2d 1, 7, 34 Cal. Rptr. 178.) Relevant to an unlawful
eviction cause of action, however, is that an unlawful
detainer action determines right to possession. (Barela v.
Superior Court (1981) 30 Cal.3d 244, 249, 178 Cal.
Rptr. 618.) Without a right to possession of the premises,
plaintiff cannot claim she was wrongfully evicted. (Code
Civ. Proc., 1174; Zimmerman v. Stotter (1984) 160 Cal.
App. 3d 1067, 1073-1074, 207 Cal. Rptr. 108.) Indeed,
the proper cause of action for a person who claims, as
does plaintiff, that she was wrongfully evicted pursuant
to an unlawful detainer action is malicious prosecution,
not wrongful eviction. (Gause v. McClelland (1951) 102
Cal. App. 2d 762, 764, Asell v. Rodrigues (1973) 32 Cal.
App. 3d 817, 824, fn. 3, 108 Cal. Rptr. 566.) However,
even this cause of action requires that the person evicted
later prevailed on appeal of the unlawful detainer
judgment. (Gause v. McClelland, supra, 102 Cal. App.
2d at pp. 764-765.) Therefore, plaintiff's claim in [*21]
this action that she was wrongfully evicted is without
merit.
DISPOSITION
The judgment is affirmed. Defendants shall recover
their costs on appeal. (Cal. Rules of Court, rule 27(a).)
NICHOLSON, J.
We concur:
SIMS, Acting P.J.
DAVIS, J.

115Q75

********** Print Completed **********

Time of Request: Friday, June 08, 2012
Print Number:
1828:354463245
Number of Lines: 1274
Number of Pages:

Send To:

TERMINAL, SIX
ALAMEDA COUNTY LAW LIBRARY
125 12TH ST
OAKLAND, CA 94607-4912

13:18:52 EST