Ngo v. Green Tree Servicing, LLC et al, No. 3:2013cv02929 - Document 15 (S.D. Cal. 2014)
Court Description: ORDER granting Defendant's 5 Motion to Dismiss. Court dismisses this case. Although unclear whether Plaintiff can amend the Complaint to state a claim, because leave to amend should be freely given, Court will give Plaintiff an opportunity to amend her claims. Any amended complaint must filed by 4/2/2014. Signed by Judge Thomas J. Whelan on 3/13/2014. (jah)
Download PDF
<![CDATA[
Ngo v. Green Tree Servicing, LLC et al Doc. 15 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA 8 9 10 11 THANG M. NGO, 12 v. 13 14 15 CASE NO: 13-CV-2929 W (RBB) Plaintiff, ORDER GRANTING DEFENDANT’S MOTION TO DISMISS [DOC. 5] GREEN TREE SERVICING, LLC, et al., Defendants. 16 17 Pending before the Court is Defendant Green Tree Servicing’s motion to dismiss 18 under Federal Rule of Civil Procedure 12(b)(6), and request for judicial notice. Plaintiff 19 Thang M. Ngo opposes the motion. The request for judicial notice is unopposed. 20 The Court decides the matter on the papers submitted and without oral 21 argument under Civil Local Rule 7.1(d)(1). The Court GRANTS Defendant’s request 22 for judicial notice [Doc. 6], and for the following reasons GRANTS Defendant’s 23 motion to dismiss [Doc. 5]. 24 25 I. BACKGROUND 26 On October 4, 2002, Thang M. Ngo obtained a loan in the amount of $396,000 27 with a monthly mortgage payment of $1,683.83. (“Compl.” [Doc. 1-2], ¶ 24.) At some 28 point, Bank of America became the servicer of Plaintiff’s loan. (Id. at ¶ 25.) Plaintiff -1- 13-CV-2929W Dockets.Justia.com 1 made on-time monthly payments until August 2012, when losses at her nail-salon 2 business rendered her unable to make the payments. (Id. at ¶¶ 24, 26.) From August 3 2012 through March 2013, Plaintiff repeatedly requested assistance from Bank of 4 America, which was denied in part because the loan was being transferred to Defendant 5 Green Tree. (Id. at ¶ 26.) 6 In April 2013, Defendant became the servicer of Plaintiff’s loan. (Compl. at ¶ 26; 7 RJN [Doc. 6], Ex. C [Doc. 6-4].) On May 6, 2013, following a request from Plaintiff, 8 Defendant offered her a Trial Period Plan (“TPP”) which increased her monthly 9 payments from $1,683.83 to $2,103.94. (Compl., ¶¶ 26-27.) Despite multiple requests 10 from Plaintiff, Defendant offered her no further options. (Id. at ¶ 27.) 11 On December 6, 2013, Plaintiff filed a civil action in the San Diego County 12 Superior Court alleging the following six causes of action: (1) breach of contract; 13 (2) constructive fraud; (3) promissory estoppel; (4) negligence; (5) negligent 14 misrepresentation; and (6) violation of Business and Professions Code §§ 17200, et seq. 15 Defendant subsequently removed the case to this Court based on federal diversity 16 jurisdiction. (Removal Notice [Doc. 1], ¶ 7.) Defendant now moves to dismiss the 17 Complaint. Plaintiff opposes. 18 19 II. LEGAL STANDARD 20 The court must dismiss a cause of action for failure to state a claim upon which 21 relief can be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 22 12(b)(6) tests the complaint’s sufficiency. See N. Star Int’l v. Ariz. Corp. Comm’n., 720 23 F.2d 578, 581 (9th Cir. 1983). All material allegations in the complaint, “even if 24 doubtful in fact,” are assumed to be true. Id. The court must assume the truth of all 25 factual allegations and must “construe them in light most favorable to the nonmoving 26 party.” Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir. 2002); see also Walleri v. 27 Fed. Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir. 1996). 28 -2- 13-CV-2929W 1 As explained by the Supreme Court, “[w]hile a complaint attacked by a Rule 2 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s 3 obligation to provide the grounds of his entitlement to relief requires more than labels 4 and conclusions, and a formulaic recitation of the elements of a cause of action will not 5 do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). 6 Instead, the allegations in the complaint “must be enough to raise a right to relief above 7 the speculative level.” Id. A complaint may be dismissed as a matter of law either for 8 lack of a cognizable legal theory or for insufficient facts under a cognizable theory. 9 Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). 10 Generally, courts may not consider material outside the complaint when ruling 11 on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 12 1542, 1555 n.19 (9th Cir. 1990). However, courts may consider documents specifically 13 identified in the complaint whose authenticity is not questioned by parties. Fecht v. 14 Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superceded by statutes on other 15 grounds). Moreover, courts may consider the full text of those documents, even when 16 the complaint quotes only selected portions. Id. Courts may also consider material 17 properly subject to judicial notice without converting the motion into one for summary 18 judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994) (citing Mack v. S. Bay 19 Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), abrogated on other grounds 20 by Astoria Fed. Sav. and Loan Ass’n v. Solimino, 501 U.S. 104 (1991)). 21 22 III. DISCUSSION 23 A. 24 Plaintiff’s first cause of action alleges Defendant Green Tree breached the Plaintiff has failed to state a claim for breach of contract. 25 Servicer Participation Agreement (“SPA”) to which Plaintiff claims to be a third-party 26 beneficiary, by failing to follow the Home Affordable Refinance Program (“HAMP”) 27 guidelines allegedly required therein. (Compl., ¶¶ 13, 30.) Plaintiff also claims that 28 -3- 13-CV-2929W 1 under California Civil Code § 1549, she can enforce the SPA contract as a third-party 2 beneficiary. (Id. at ¶ 31.) Plaintiff is mistaken for at least two reasons. 3 First, numerous district courts have considered whether borrowers are intended 4 beneficiaries of contracts entered pursuant to HAMP. The vast majority of cases have 5 found that borrowers are not third-party beneficiaries. See Orcilla v. Bank of America, 6 N.A., 2010 WL 5211507, *3 (N.D. Cal., 2010) (citing Hoffman v. Bank of America, 7 N.A., 2010 WL 2635773, *3 (N.D. Cal., 2010); Morales v. Chase Home Finance LLC, 8 2011 WL 1670045, *9 (N.D. Cal., 2011).) This Court agrees with those cases, and thus 9 the breach of contract claim fails as a matter of law. 10 Second, Plaintiff misconstrues the HAMP requirements. By her own admission, 11 HAMP only requires a servicer to “determine which loans meet HAMP eligibility 12 criteria,” and does not require offering a loan modification. (Compl., ¶ 15.) HAMP 13 simply provides guidelines in the decision-making process for loan modifications. 14 Escobedo v. Countrywide Home Loans, Inc., WL 4981618, *3 (S.D. Cal., 2009). Only 15 when a borrower is offered and successfully completes a TPP, does the obligation to 16 offer a permanent loan modification arise. Corvello v. Wells Fargo Bank, NA et al., 728 17 F.3d 878 (9th Cir. 2013). However, that duty arises from the TPP (i.e. , contract) 18 between the homeowner and servicer, and not from the SPA between the U.S. Treasury 19 and the servicer. Id. And here, Plaintiff pleads no facts that she accepted and 20 completed the TPP. (Compl., ¶¶ 26-28.) 21 For these reasons, Plaintiff’s claim for breach of the SPA fails. 22 23 B. Plaintiff has failed to state a claim for constructive fraud. 24 The second cause of action alleges that Defendant Green Tree was deceitful by 25 offering Plaintiff a TPP that charged her more than her original mortgage payments. 26 (Compl., ¶ 38.) “Constructive fraud is a unique species of fraud applicable only to a 27 fiduciary or confidential relationship.” Assilzadeh v. California Federal Bank, 82 Cal. 28 App. 4th 399, 415 (2000). In California, a fiduciary duty exists when a party -4- 13-CV-2929W 1 “knowingly undertake[s] to act on behalf and for the benefit of another, or must enter 2 into a [special] relationship which imposes that undertaking as a matter of law.” City 3 of Hope National Medical Center v. Genentech, Inc., 43 Cal. App. 4th 375, 385 4 (2008). 5 Here, Defendant is the servicer of Plaintiff’s loan. Plaintiff admits that when 6 Defendant “was merely the [s]ervicer of Plaintiff’s loan, . . . the traditional lender 7 borrower relationship [existed], which d[id] not impose a duty of care.” (Compl., ¶ 45.) 8 Then, without citing any authority, Plaintiff alleges that “[b]y offering a Trial Period 9 Plan, [Defendant] stepped outside its role as a traditional lender and created a duty to 10 deliver a modification of the original note and Deed of Trust.” (Id. at ¶ 38.) Plaintiff 11 refers to the alleged duty as requiring Defendant to “save Plaintiff’s home from 12 foreclosure.” (Id.) 13 While there is some disagreement regarding whether offering a loan modification 14 is outside the scope of a traditional money-lender relationship, several district courts 15 and one recent California appellate decision have found that “offering loan 16 modifications is sufficiently entwined with money lending so as to be considered within 17 the scope of typical money lending activities. . . .” Aspiras v. Wells Fargo Bank, N.A., 18 219 Cal. App. 4th 948 (2013); Alvarado v. Aurora Loan LLC, 2012 WL 4475330 (C.D. 19 Cal. 2012) (holding a servicing company owed no duty to plaintiff for offering a loan 20 modification); Settle v. World Sav. Bank, F.S.B., 2012 WL 1026103 (C.D. Cal. 2012) 21 (characterizing loan modifications as a traditional money lending activity); Johnston v. 22 Ally Fin. Inc., 2011 WL 3241850 (S.D. Cal. 2011) (same). This Court agrees with 23 these cases, and finds that Defendant did not owe Plaintiff a fiduciary relationship by 24 offering her a TPP. 25 Although the Court finds the Complaint lacks facts demonstrating that 26 Defendant owed Plaintiff a fiduciary duty, the Court will give Plaintiff an opportunity 27 to plead other facts demonstrating that Defendant went above and beyond a traditional 28 servicer-borrower role. -5- 13-CV-2929W 1 C. Plaintiff has failed to state a claim for promissory estoppel. 2 Plaintiff’s third cause of action alleges promissory estoppel. Promissory estoppel 3 requires: (1) a clear promise; (2) reasonable reliance; (3) substantial detriment; and 4 (4) damages. Toscano v. Greene Music, 124 Cal. App. 4th 685, 692 (2004). 5 Plaintiff’s promissory estoppel cause of action is based on the theory that 6 Defendant promised her that a lower payment would be forthcoming, but instead 7 ultimately offered her a higher payment. (Compl., ¶ 42.) Plaintiff further alleges that 8 she “justifiably and actually relied on” Defendant’s promise of forthcoming lower 9 payments “to her detriment such that one years’ worth of arrears accumulated.” (Id., 10 ¶ 42.) There are at least two problems with this claim. 11 According to the Complaint, in August 2012, Plaintiff stopped making mortgage 12 payments due to “her continued loss of income from her self-employment of a nail 13 salon.” (Id. at ¶ 26.) Plaintiff further alleges that at the time (and through “late 2012"), 14 Bank of America was still the servicer of the loan (not Defendant). (Id.) Indeed, the 15 Complaint and Deed of Trust confirm that Defendant did not become the servicer of 16 the loan until April 2013. (See RJN [Doc. 6], Ex. C [Doc. 6-4].) Based on these 17 allegations, the only reasonable inference is that Plaintiff stopped making payments 18 because of her financial hardship, and not because of anything Defendant did or did not 19 do. 20 Moreover, Plaintiff also alleges that she did not request a loan modification from 21 Defendant until it became the servicer: 22 In April 2013, after GREEN TREE became the servicer, [] Plaintiff requested that GREEN TREE follow the HAMP and FDIC guidelines, as 23 well as the California statutes, and allow her to save her home from foreclosure. 24 (Compl., ¶ 26.) Plaintiff also concedes that on “May 6, 2013,” approximately one 25 month later, “GREEN TREE offered Plaintiff a . . . TPP that increased, not reduced, her 26 monthly mortgage . . . .” (Id., ¶ 27.) Based on these allegations, it is not reasonable to 27 infer that Plaintiff’s accrual of one-year’s worth of payments was the result of her 28 reliance on Defendant’s alleged promise of lower future payments. -6- 13-CV-2929W 1 Because Plaintiff’s allegations suggest that she stopped making payments as a 2 result of her financial hardship and that she did not accrue one-years work of arrears 3 as a result of Defendant’s conduct, Plaintiff has failed to establish reasonable reliance, 4 and substantial detriment. For these reasons, the Court finds Plaintiff has failed to state 5 a claim for promissory estoppel. 6 7 D. Plaintiff has failed to state a claim for negligence. 8 The fourth cause of action in Plaintiff’s Complaint is for negligence. Negligence 9 requires the Plaintiff to show there is a legal duty owed to her. Wiener v. Southcoast 10 Childcare Centers, Inc., 32 Cal. 4th 1138 (2004). Plaintiff makes the same arguments 11 here as she did under her constructive fraud claim— that Defendant stepped outside 12 its traditional role when it offered her a TPP, thus creating a duty. (Compl., ¶ 45.) For 13 the reasons discussed with respect to the claim for constructive fraud, the Court finds 14 Plaintiff has failed to plead facts establishing the existence of a duty. 15 16 E. Plaintiff has failed to state a claim for negligent misrepresentation. 17 Plaintiff’s fifth cause of action alleges negligent misrepresentation, which requires 18 (1) a misrepresentation of a material fact; (2) made without reasonable grounds for 19 believing it to be true; (3) made to induce reliance on the fact misrepresented; 20 (4) plaintiff’s justifiable reliance; and (5) resulting damages. Wells Fargo Bank, N.A. 21 v. FSI, Financial Solutions, Inc., 196 Cal. App. 4th 1559, 1573 (2011). 22 Plaintiff’s negligent misrepresentation claim suffers from the same deficiencies as 23 Plaintiff’s promissory-estoppel claim. In short, the Complaint’s allegations strongly 24 suggest that Plaintiff stopped making payments and accrued a year’s worth of arrears 25 because of her financial hardship and not because of any promise by Defendant. 26 Accordingly, Plaintiff has failed to plead facts demonstrating justifiable reliance and 27 resulting damages. 28 -7- 13-CV-2929W 1 Additionally, the Complaint’s factual allegations provide insufficient notice to 2 Defendant regarding the alleged misrepresentation. Plaintiff alleges that Defendant’s 3 “employees misrepresented that a lower payment would be offered . . . without 4 reasonable grounds for believing it to be true.” (Compl., ¶ 51.) More is required to 5 assert a claim for deceit. For purposes of this case, Plaintiff must also identify who, 6 when and how the misrepresentation was made. Accordingly, for this additional reason, 7 the Court finds the misrepresentation claim is deficient. 8 9 10 F. Plaintiff has failed to state a claim for violation of the UCL. Plaintiff’s sixth cause of action alleges that Defendant’s business conduct 11 constitutes a violation of California’s UCL, which prohibits “any unlawful, unfair or 12 fraudulent business act or practice and unfair, deceptive, untrue or misleading 13 advertising.” Cal. Bus. & Prof. Code § 17200. Because section 17200 is written in the 14 disjunctive, it establishes three varieties of unfair competition: acts or practices that are 15 (1) unlawful, (2) unfair, or (3) fraudulent. Cel-Tech Commc’ns, Inc. v. L.A. Cellular 16 Tel. Co., 20 Cal. 4th 163, 180 (1999). 17 To pursue a section 17200 claim, plaintiffs are required to establish that they 18 “suffered an injury in fact and [] lost money or property as a result of the unfair 19 competition.” Cal. Bus. & Prof. Code § 17204. Economic injury is a classic form of 20 injury in fact, and exists where the plaintiff is deprived of property or money to which 21 he or she has a cognizable claim. Kwikset Corp. v. Super. Ct., 51 Cal. 4th 310, 323 22 (2011). 23 Defendant argues that Plaintiff’s UCL claim should be dismissed because she 24 lacks standing to pursue the claim, and she has failed to plead facts demonstrating that 25 Defendant violated any of the UCL’s three prongs. The Court agrees. 26 Plaintiff appears to allege two types of damages caused by Defendant. First she 27 alleges that Defendant “caus[ed] one year of missed payments to occur. . . .” (Compl., 28 -8- 13-CV-2929W 1 ¶ 56.) For the reasons stated above, the Court finds the allegations in the factual 2 background portion of the Complaint establish that the missed payments were due to 3 her own financial hardship and not Defendant’s conduct. 4 Second, Plaintiff alleges that as a result of Defendant’s conduct, she faces the 5 “prospect of losing her home forever to a trustee’s sale.” (Compl., ¶ 62.) As 6 Defendant’s point out, this allegation is insufficient because it is based on the possibility 7 Plaintiff may lose her home, and thus she has failed to allege the deprivation of property 8 or money. 9 Finally, the Complaint’s factual allegations indicate that within a month of 10 becoming the servicer of Plaintiff’s loan and receiving her request for a modification, 11 Defendant allegedly offered a TPP that would increase her payments. These allegations 12 are simply insufficient to establish that Defendant engaged in unlawful, unfair, or 13 fraudulent conduct. 14 15 IV. CONCLUSION AND ORDER 16 For the foregoing reasons, the Court GRANTS Defendant Green Tree’s motion 17 [Doc. 5] and DISMISSES this case. Although unclear whether Plaintiff can amend the 18 Complaint to state a claim, because leave to amend should be freely given, the Court 19 will give Plaintiff an opportunity to amend her claims. However, any amended 20 complaint must be filed on or before April 2, 2014. 21 22 IT IS SO ORDERED. 23 24 DATED: March 13, 2014 25 Hon. Thomas J. Whelan United States District Judge 26 27 28 -9- 13-CV-2929W
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
