Opinion
Case No. 11-6598 SC
06-07-2012
TARCICIO MORA and REMEDIOS MORA, Plaintiffs, v. U.S. BANK N.A., as Trustee for the holders of the First Franklin Mortgage Loan Trust Mortgage Pass-Through Certificates, Series 2005-FF9, SELECT PORTFOLIO SERVICING, INC., NATIONAL DEFAULT SERVICING CORPORATION, and DOES 1 THROUGH 20, Defendants.
ORDER GRANTING DEFENDANTS'
MOTION TO DISMISS CORRECTED
FIRST AMENDED COMPLAINT
I. INTRODUCTION
Plaintiffs Tarcicio and Remedios Mora (collectively, "Plaintiffs") seek postponement of the pending non-judicial foreclosure sale of their home at 1264 San Rafael Drive in Petaluma, California (the "Property"), as well as compensatory damages of $65,000. ECF No. 17 (Corrected First Amended Complaint ("CFAC")) at 14. Their lawsuit names three Defendants: U.S. Bank N.A. ("USB"), who allegedly is the beneficiary of the deed of trust on the Property; Select Portfolio Servicing, Inc. ("SPS"), who allegedly is the mortgage servicer; and National Default Servicing Corporation ("NDSC"), who allegedly is the foreclosure trustee and agent for USB (collectively, "Defendants"); as well as twenty unnamed "Does." CFAC ¶¶ 2-5.
Plaintiffs originally filed this case in California state court. Thereafter, Defendants removed to federal court on the basis of diversity. Following a series of motions, as well as amendments and corrections of Plaintiffs' pleading, this Court retained jurisdiction and determined that the CFAC is the operative complaint in this case. See ECF No. 23.
The CFAC asserts four claims: (1) against all Defendants, violation of California Civil Code Section 2923.5 ("Section 2923.5"); (2) against USB and SPS, violation of California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 ("UCL"); (3) against SPS, breach of contract; and (4) against all defendants, promissory estoppel. Defendants move to dismiss the CFAC in its entirety. ECF No. 24 ("Mot."). The Motion is fully briefed, and suitable for determination without oral argument. ECF Nos. 26 ("Opp'n"), 28 ("Reply"). For the reasons set forth below, the Court GRANTS Defendants' Motion and dismisses the CFAC.
Concurrently with their Motion to Dismiss, Defendants filed a Request for Judicial Notice of several documents. ECF Nos. 25 ("RJN") Exs. 1 (Deed of Trust ("DOT")), 2 (Assignment of Deed of Trust, recorded December 14, 2010 ("Dec. 14 Ass."), 3 (Notice of Default ("NOD")), 4 (Notice of Substitution of Trustee ("Not. Sub. T.")), and 5 (Notice of Trustee's Sale ("Not. T. Sale")). None of these documents were attached to the CFAC. Nevertheless, the Court takes judicial notice of them because the CFAC depends on their contents and neither party disputes their authenticity. Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).
II. BACKGROUND
For purposes of this Rule 12(b)(6) motion, the Court takes all the well-pleaded allegations of the CFAC as true and construes them in the light most favorable to Plaintiffs. Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001). On June 29, 2005, Plaintiffs took out a $400,000 adjustable rate mortgage loan, repayment of which was secured by a Deed of Trust recorded against the Property. CFAC ¶ 17; DOT. The Property was and is Plaintiffs' residence. CFAC ¶ 40; see DOT at 9 (paragraph captioned "Occupancy"). On December 14, 2010, an assignment of the Deed of Trust was recorded in Sonoma County, naming USB as its beneficiary. CFAC ¶ 18; Dec. 14 Ass. Plaintiffs allege that, on October 24, 2011, another assignment of the Deed of Trust was recorded. CFAC ¶ 19. Plaintiffs further allege that their loan was pooled into a mortgage-backed security called the First Franklin Mortgage Loan Trust Mortgage Pass-Through Certificates, Series 2005-FF9. Id. ¶ 20. Plaintiff identifies USB as the trustee. Id. ¶ 21. Plaintiff does not identify the date on which the trust pool allegedly was created. See id. ¶ 20.
Plaintiffs do not allege how this assignment changed the previous one.
Since at least June 2009, SPS has acted as USB's servicing agent for the loan. Id. ¶¶ 24-25, 76, 85. Plaintiffs allege that SPS "has continuously represented to Plaintiffs that they will obtain a loan modification." Id. ¶ 59. But, Plaintiffs allege, SPS has repeatedly denied Plaintiffs' applications for a loan modification while asking Plaintiffs "to 'apply again.'" Id. (quotation in original). The Court construes these allegations to refer to permanent loan modification, as opposed to temporary. That is because Plaintiffs go on to allege that, in June 2006, SPS put them on a "Trial Period Payment Plan," under which Plaintiffs would make monthly payments of $1,500.00. Id. ¶¶ 27, 76. Plaintiffs allege that SPS told them "that the Trial Period would lead to a permanent modification on their loan." Id. ¶ 27. Plaintiffs allege in conclusory fashion that in reliance on SPS's promise to permanently modify the loan they performed all their obligations during the Trial Period, including making their $1,500 monthly payments. Id. ¶¶ 27, 77.
On December 14, 2010, NDSC recorded a Notice of Default which indicated that Plaintiffs were $54,956.30 past due on their loan. Id. ¶¶ 28, 42, 88; NOD. The Notice of Default states: "This loan is exempt. Compliance with California Civil Code § 2923.5 and 2924.8 is not necessary to proceed with preparing and processing a notice of default. " NOD at 2; see also CFAC ¶ 29. Notwithstanding the purported exemption from Section 2923.5 appearing on the face of the Notice of Default, Plaintiffs allege that Defendants violated the statute by failing to contact, or attempt to contact, Plaintiffs prior to filing the NOD or commencing foreclosure proceedings," in violation of Section 2923.5. CFAC ¶¶ 31-32, 46, 52.
The Court later addresses the apparent contradiction between these allegations and others which describe extensive contact between Defendants and Plaintiffs. See infra Section IV.A.
On November 7, 2011, two documents pertaining to the Property were recorded in Sonoma County, California. The first was a Substitution of Trustee in favor of NDSC. The second was a Notice of Trustee's Sale scheduling the foreclosure sale of the Property for November 30, 2011. See Not. Sub. T., Not. T. Sale. It appears that the foreclosure sale has not yet occurred. See CFAC at 14 (Plaintiffs praying for postponement of sale); MTD at 2 (Defendants seeming to acknowledge that sale has not yet "go[ne] forward").
III. LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). "Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The allegations made in a complaint must be both "sufficiently detailed to give fair notice to the opposing party of the nature of the claim so that the party may effectively defend against it" and "sufficiently plausible" such that "it is not unfair to require the opposing party to be subjected to the expense of discovery." Starr v. Baca, 633 F.3d 1191, 1204 (9th Cir. 2011).
IV. DISCUSSION
A. Claim One (Section 2923.5)
California's Civil Code provides a comprehensive framework for non-judicial foreclosure. First, the lender must record a notice of default. Then, after three months have elapsed, the lender must give notice of the planned foreclosure sale. Cal. Civ. Code § 2924. Section 2923.5 concerns the notice of default. It requires the "mortgagee, trustee, beneficiary, or authorized agent" seeking to file a notice of default to first contact the borrower in person or by telephone "in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure." Cal. Civ. Code § 2923.5(a)(2). The notice of default may not be filed until thirty days after this initial contact or the statute's due diligence requirements are satisfied. Id. § 2923.5(a)(1). During this initial contact, the party seeking to file a notice of default must advise the borrower that he or she has the right to request a subsequent meeting and, if requested, schedule the meeting within fourteen days. Id. § 2923.5(a)(2).
The rights provided to borrowers under Section 2923.5 are solely procedural in nature; the statute does not provide a substantive right to a loan modification. See Mabry v. Super. Ct., 185 Cal. App. 4th 208, 231-32 (Cal. Ct. App. 2010). Nor does the statute obligate the lender "to become a loan counselor itself." Id. at 219. The lender's obligations under Section 2923.5 to "assess" the borrower's financial situation and "explore" options to avoid foreclosure can be satisfied by simply asking the borrower "why can't you make your payments?" and "telling the borrower the traditional ways that foreclosure can be avoided (e.g., deeds 'in lieu,' workouts, or short sales)." Id. at 232.
Ortiz v. Accredited Home Lenders, Inc., 639 F. Supp. 2d 1159 (S.D. Cal. 2009), demonstrates the limited scope of a lender's duty under Section 2923.5. In that case, plaintiff borrowers alleged that their lender had "failed and refused to explore" alternatives to foreclosure with them. Id. at 1166. Plaintiffs did not specifically allege that the borrower had failed to contact them, and the borrower had filed a declaration of compliance with Section 2923.5 along with the notice of trustee sale. Id. The district court found that plaintiffs failed to state a Section 2923.5 claim because the declaration of compliance, in conjunction with the allegation that the lender "refused to explore" loan modification, implied that the borrowers "were contacted as required by the statute." Id.
This case is similar to Ortiz. Plaintiffs allege that "SPS, on many occasions and for a long period of time, has misrepresented and misled Plaintiffs to believe that they will provide Plaintiffs with a loan modification to help them keep their home." CFAC ¶ 25. Plaintiffs allegedly responded to requests for documents initiated by SPS. See id. ¶ 26. Plaintiffs even acknowledge that SPS placed Plaintiffs "on a Trial Period Payment Plan" -- that is, SPS gave them a temporary loan modification, in effect if not in name. Id. ¶ 27; see also id. ¶¶ 59, 76, 86. This trial period began in June 2009 and the Notice of Default was recorded roughly eighteen months later -- well after the thirty-day period required by Section 2923.5. Id. ¶ 76; NOD. Essentially, Plaintiffs' allegations amount to a concession that they received all the "assess[ment]" and "explor[ation]" required by Section 2923.5.
The Court notes that the CFAC also contains boilerplate assertions that Defendants "neither contacted, or attempted to contact Plaintiffs," id. ¶ 46, and that Defendants "failed to contact Plaintiffs . . . ," id. ¶ 52. See also id. ¶¶ 31-32 (same). The Court does not take these allegations as true because they are merely legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678; see also id. at 679 (when ruling on motions to dismiss, district courts may "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth"). The Court determines that Plaintiffs' blanket denials of contact from Defendants are nothing more than "formulaic recitation[s] of the elements of a cause of action" -- in this case, a Section 2923.5 claim. Id. at 678. Specifically, paragraphs 31 and 32 of the CFAC state:
At no time did the mortgagee, trustee, beneficiary, or authorized agent contact Plaintiff [sic], in person or by telephone, to assess the borrowers' financial situation and explore options to avoid foreclosure as mandated by California Civil Code section 2923.5. At no time did the mortgagee, trustee, beneficiary, or authorized agent attempted [sic] to contact Plaintiff [sic] in accordance with the due diligence requirements of California Civil Code section 2923.5.These paragraphs merely recite the language of Section 2923.5.Plaintiffs' other blanket denials are similar. Paragraph 46 states:
Contrary to the requirements of Cal. Civ. Code § 2923.5, Defendants USB, SPS and NDSC, as an agent for USB and SPS, neither contacted, or [sic] attempted to contact Plaintiffs prior to filing the NOD or commencing foreclosure proceedings, and as such the non judicial [sic] foreclosure in [sic] not being conducted in accordance with of [sic] Cal. Civ. Code § 2924.Paragraph 52 states:
Defendants USB, SPS and NDSC, as an agent for USB and SPS, failed to contact Plaintiff [sic] to satisfy the detailed requirements of Cal. Civ. Code § 2923.5(a)(2), or the due diligence requirements of Cal. Civ. Code § 2923.5(g), and did not adhere to the mandates laid out by the legislature before commencing a non-judicial
foreclosure. Accordingly[,] they are precluded from proceeding with non-judicial foreclosure pursuant [to] Cal. Civ. Code § 2924 until the requisite contact is made with Plaintiffs.
"A mortgagee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure." Cal. Civ. Code § 2923.5(a)(2).
If the Court were to take these paragraphs as factual allegations, it would have to wrestle with the contradiction between, on the one hand, Plaintiffs' denial of "the requisite contact" from Defendants within the portion of the pleading devoted to the Section 2923.5 claim and, on the other hand, their frequent acknowledgement of contact elsewhere, including in their opposition brief. Opp'n at 9, 11. Indeed, Plaintiffs rely on the existence of numerous conversations between themselves and SPS for their breach of contract and promissory estoppel claims, which center on Defendants' alleged failure to make good on promises to give Plaintiffs a permanent loan modification. See infra Section IV.C. Even resolving all reasonable doubts in favor of Plaintiffs, the inescapable conclusion is that Plaintiffs' blanket denials of having been contacted by Defendants exist simply to state the elements of a Section 2923.5 claim, and are the sort of "naked assertions" that do not satisfy Rule 8's pleading requirements. See Iqbal, 556 U.S. at 678. The Court therefore takes only the more specific allegations set forth in the CFAC as well-pleaded factual allegations entitled to the presumption of truth. The more general "allegations" are conclusions of law couched as facts.
Once shorn of Plaintiffs' legal conclusions, the CFAC's allegations amount to an admission that Defendants complied with Section 2923.5. Plaintiffs' Section 2923.5 claim therefore fails. Moreover, the Court determines that additional amendment could not save the claim. Plaintiffs already have alleged in adequately clear fashion that they have received all the process to which Section 2923.5 entitles them. Accordingly, the Court DISMISSES Plaintiffs' Section 2923.5 claim WITH PREJUDICE.
Though the Court rules in Defendants' favor on this claim, one of their arguments bears further discussion because it borders on the frivolous. See Fed. R. Civ. P. 11(b)(2). Defendants urge dismissal of Plaintiffs' Section 2923.5 claim on the novel theory that, because the Notice of Default says Plaintiffs' loan was "exempt" from compliance with Section 2923.5 (as well as Civil Code Section 2924.8), Plaintiffs bear the burden of showing the loan is not exempt. See MTD at 7-8. Defendants cite no authority for this remarkable proposition, i.e., that a loan is presumptively exempt from California's statutory foreclosure procedures whenever the foreclosing party says it is. Nor do Defendants address the obvious issue that they, not Plaintiffs, bear the burden of persuasion in connection with the instant motion.
B. Claim Two (Cal. Bus. & Prof. Code § 17200 ("UCL"))
The UCL "establishes three varieties of unfair competition -- acts or practices which are [1] unlawful, or [2] unfair, or [3] fraudulent." Bernardo v. Planned Parenthood Fed'n of Am., 115 Cal. App. 4th 322, 351 (2004). The Court concludes that Plaintiffs have not alleged the facts supporting their UCL claim with enough specificity to put Defendants on notice of the bases of the claim. Neither have Plaintiffs consistently represented the legal theories under which they intend to proceed.
The CFAC is no model of clarity, but Plaintiffs appear to bring their UCL claim under only the UCL's "unfair" and "fraudulent" prongs, not the "unlawful" prong. CFAC ¶ 58; but see id. ¶ 72 (cursory mention of "unlawful" acts). Plaintiffs' only specific allegation pertaining to the UCL is paragraph 59:
SPS has continuously misrepresented to Plaintiffs that they will obtain a loan modification. And yet [SPS] repeatedly has denied him [sic] for the same[,] not providing reasons for the rejection but rather continuing the deceit by further misleading Plaintiffs asking to "apply again" [sic] with no real good faith intention of helping Plaintiffs save their home and avoid foreclosure.Leaving aside that this paragraph misstates the scope of Defendants' obligation to Plaintiffs, which falls significantly short of a duty to "help[] Plaintiffs save their home," see supra Section IV.A, Plaintiffs fail to allege when or where SPS's promises to Plaintiffs took place, specifically what SPS promised, or how these promises constituted "deceit." Neither do Plaintiffs explain, beyond offering mere "labels and conclusions," Iqbal, 556 U.S. at 678, how denying Plaintiffs' application for a loan modification was "unfair," as that term is used in UCL jurisprudence. See, e.g., Cel-Tech Communications, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 186-87 (1999); Scripps Clinic v. Superior Court, 108 Cal. App. 4th 917, 939-40 (2003). Neither do Plaintiffs provide any specific facts supporting their blanket assertion that they were injured or lost money or property as a result of the alleged unfair or fraudulent practices. See Clayworth v. Pfizer, Inc., 49 Cal. 4th 758, 788 (2010).
Challenged on these points by Defendants, Plaintiffs provide no meaningful response. They merely point to generalized allegations of "multiple violations" of the UCL. Opp'n at 9 (citing CFAC ¶¶ 64-67). This will not do. See Iqbal, 556 U.S. at 678 (Rule 8 "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation"). Plaintiffs' opposition brief not only fails to clear up any ambiguities in the CFAC, it introduces a new one by addressing UCL unlawfulness when the CFAC appears to proceed on unfairness and misrepresentation theories. Compare CFAC ¶ 58 with Opp'n at 9. This leaves open the question of which legal theories Plaintiffs actually intend to invoke. Finally, as regards standing, Plaintiffs merely gesture in the general direction of the CFAC and say "it is clear" that Plaintiffs have satisfied the standing requirements for private UCL plaintiffs. Opp'n at 9.
Plaintiffs have not approached the minimum requirements for pleading a UCL claim, or even consistently identified what type of UCL claim they assert. Accordingly, the Court DISMISSES Plaintiffs' UCL claim. Because the Court cannot determine at this juncture that amendment would be futile, the Court grants Plaintiffs LEAVE TO AMEND this claim. Any amended pleading shall be consistent with the guidance in this Order. Additionally, given Plaintiffs' previous amendments, any future requests for leave to amend shall be disfavored.
C. Claims Three and Four (Breach of Contract and Promissory Estoppel)
"To state a cause of action for breach of contract, a party must plead the existence of a contract, his or her performance of the contract or excuse for nonperformance, the defendant's breach and resulting damage." Harris v. Rudin, Richman & Appel, 74 Cal. App. 4th 299, 307 (1999). Additionally, if the alleged contract has been reduced to writing, "the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference." Id.
Here, Plaintiffs assert the legal conclusion that they formed a contract with SPS, but they do not allege: the basics of contract formation; what the terms of the contract were; or under what circumstances SPS allegedly breached the contract. Plaintiffs do not even say whether the alleged contract was oral or written. Additionally, Plaintiffs seek specific performance of the contract but do not allege, among other things, sufficiently definite terms that would allow the Court to determine whether the requested performance is substantially similar to that required under the contract. See Union Oil Co. of California v. Greka Energy Corp., 165 Cal. App. 4th 129, 134 (2008). Neither do they explain how the legal remedy they seek -- postponement of the foreclosure sale pursuant to Section 2923.5 -- would be inadequate. See id. In short, Plaintiffs have not pled enough facts for the Court to determine what the contract allegedly was or to state a plausible claim to the type of relief they seek.
Defendants argue that, "to whatever extent they are attempting to do so, Plaintiffs cannot premise their breach of contract claim on an alleged failure to give Plaintiffs a Home Affordable Modification Program ('HAMP') modification" because HAMP provides no private right of action. MTD at 5. Defendants are correct. See Cleveland v. Aurora Loan Servs., LLC, C 11-0773 PJH, 2011 WL 2020565, at *4 (N.D. Cal. May 24, 2011) (collecting authorities). However, Plaintiffs specifically deny basing their breach of contract claim on HAMP. Opp'n at 10.
Plaintiffs argue that they may satisfy Rule 8 simply by pleading the "legal effect" of the contract. Opp'n at 9 (citing Constr. Protective Services, Inc. v. TIG Specialty Ins. Co., 29 Cal. 4th 189, 198-99 (2002)). Not so. "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal, 556 U.S. at 679. Plaintiffs' citation to a California state case elaborating a pleading standard applicable in a California state court is inapposite in the context of the instant motion, which is governed by the Federal Rules and Iqbal.
Plaintiffs' promissory estoppel claim fails for the same reason as the contract claim. Plaintiffs are required to set forth plausible allegations of "(1) a clear promise, (2) reliance, (3) substantial detriment, and (4) damages measured by the extent of the obligation assumed and not performed." Poway Royal Mobilehome Owners Ass'n v. City of Poway, 149 Cal. App. 4th 1460, 1471 (2007) (internal quotation marks omitted). Plaintiffs' claim falters at the first prong. Plaintiffs allege, variously, that SPS (as well as unnamed Does): "made a promise that Plaintiffs would be approved for a loan modification on or about June 2009," CFAC ¶ 85; "promised Plaintiffs would receive a permanent modification of the account after the third Trial Period payment was made," id. ¶ 86; and/or asked Plaintiffs to make monthly payments of $1,500 and represented that making these payments "would lead to a permanent modification on their loan," id. ¶¶ 27, 76. While the allegations are reasonably clear about SPS requiring Plaintiffs to make three trial payments, they are unclear about what would follow these payments: did SPS promise to agree to a permanent loan modification, or merely to review Plaintiffs' application for one?Plaintiffs' briefing does not clarify the matter. See Opp'n at 9 ("Under term [sic] of the agreement, . . . Plaintiffs would be reviewed for and receive a permenant [sic] loan modification."). In addition to failing to illuminate the terms of the alleged promise, Plaintiffs fail to identify who made it ("SPS and Does 1-20") or when ("on or about June 2009"). Plaintiff has made no more than "conclusory allegations about an unspecified individual agreeing to a loan modification with unspecified terms at some point in the unspecified future . . . ." Melegrito v. CitiMortgage Inc., C 11-01765 LB, 2011 WL 2197534, at *13 (N.D. Cal. June 6, 2011). These cannot sustain a promissory estoppel claim. Id.
The Court notes that the former promise would be unenforceable under California law. See Copeland v. Baskin Robbins U.S.A., 96 Cal. App. 4th 1251, 1257-58 (Cal. Ct. App. 2002) ("agreements to agree," unlike agreements to negotiate, are unenforceable).
Accordingly, the Court DISMISSES Plaintiffs' promissory estoppel claim, as well as the breach of contract claim discussed above. As with Plaintiffs' UCL claim, the Court is unable to determine at this time that further amendment would be futile, and therefore grants Plaintiffs LEAVE TO AMEND Claims Three and Four in a manner consistent with the guidance in this Order. Further requests for leave to amend will be disfavored.
Plaintiffs assert their promissory estoppel claim against all three Defendants, but the allegations relate only to SPS and the aforementioned Does. Any further amendment of this claim must contain clear allegations that support a plausible claim against USB (as well as NDSC, see infra Section IV.D.2) or this claim will be dismissed against USB and NDSC WITH PREJUDICE.
--------
D. Final Matters
Because Plaintiffs have the Court's leave to amend their complaint, in the interest of judicial economy and narrowing the issues for trial, the Court will provide further guidance in connection with arguments that the parties have repeatedly raised.
1. Tender
Defendants challenge Plaintiffs' right to a postponement of the foreclosure sale on the ground that Plaintiffs have not offered to tender the amount in default. MTD at 11. Defendants concede that stating a claim under Section 2923.5 would permit Plaintiffs to seek postponement without tender, because Plaintiffs would be seeking postponement as a statutory (i.e., legal) remedy rather than an equitable one. See id. Having found that Plaintiffs do not and cannot state a Section 2923.5 claim, supra Section IV.A, the Court determines that to continue to seek postponement of the foreclosure sale Plaintiffs must satisfy California's tender rule or show that this case fits into an exception from the tender rule. Plaintiffs argue that the tender rule does not apply in this case because "Plaintiffs both attack the validity of the debt and assert counterclaims and set-offs." Opp'n at 6. "In fact," Plaintiffs explain, "Plaintiffs are not challenging irregularities in the foreclosure proceeding. Rather, they argue that Defendants did not comply with [C]ivil Code section 2923.5 and the underlying debt occurred as a result of fraud, misrepresentations, false promises and deceit." Id.
Because the Court dismisses Plaintiffs' Section 2923.5 claim, it passes over Plaintiffs' assertion that that claim somehow did not "challeng[e] irregularities in the foreclosure proceeding." But Plaintiffs' argument still troubles the Court. Plaintiffs describe themselves as challenging the "underlying debt," but the "fraud, misrepresentations, false promises and deceit" alleged in the CFAC do not relate to the underlying debt; they pertain to SPS's alleged promise to provide Plaintiffs with a permanent loan modification. The CFAC does not appear to challenge the underlying debt in any fashion. Neither does it allege (or even fairly suggest the existence of) "counterclaims and set-offs." If Plaintiffs continue to seek postponement of the foreclosure sale, their amended complaint must: offer to tender; contain allegations attacking the underlying debt; or provide some other colorable reason to exempt Plaintiffs from the tender rule.
2. Claims Against NDSC
Defendants seek dismissal of Claims 1, 2, and 4 with respect to NDSC. MTD at 12. Defendants argue that Plaintiffs have pled no facts that could subject NDSC to liability, given that California law shields foreclosure trustees from liability for certain good faith errors. Id. (citing Cal. Civ. Code § 2924(b); Pro Value Props., Inc. v. Quality Loan Serv. Corp., 170 Cal. App. 4th 579, 583 (Cal. Ct. App. 2009)). As Defendants point out, Plaintiffs entirely fail to respond to this argument. Reply at 11. Accordingly, the Court DISMISSES all claims against NDSC without prejudice. Plaintiffs may, consistent with Rule 11, amend their complaint to state viable claims against NDSC. If they do not do so within thirty (30) days, the Court will deem Plaintiffs' claims against NDSC dismissed with prejudice. As discussed earlier, additional requests for leave to amend shall be disfavored.
V. CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants' Motion to Dismiss the CFAC. The Court dismisses Claim One (the Section 2923.5 claim) WITH PREJUDICE. The Court dismisses the remaining claims WITHOUT PREJUDICE. Plaintiffs may amend their complaint consistent with the guidance in this Order. If Plaintiffs do not file an amended complaint within thirty (30) days of the signature date of this Order, the Court will dismiss this case against all Defendants with prejudice. Given the procedural history of this case, additional requests for leave to amend are disfavored.
IT IS SO ORDERED.
_________________________
UNITED STATES DISTRICT JUDGE