Mattos v. Nationstar Mortgage LLC

Opinion

1 2 3 4 5 6 7 10 11 THOMAS MATTOS, No. 2:24-cv-02508-DJC-DMC 12 Plaintiff, 13 v. ORDER 14 NATIONSTAR MORTGAGE, LLC DBA 15 MR. COOPER, et al., 16 Defendants. 17 18 19 Pending before the Court is Defendant’s Motion to Dismiss Plaintiff’s First 20 Amended Complaint. Defendant alleges that Plaintiff’s claims for violations of the 21 California Homeowner Bill of Rights, wrongful foreclosure, violations of the UCL and 22 cancellation of instruments fail because Plaintiff lacks standing to bring such claims 23 and/or fails to plausibly state claims upon which relief can be granted. For the 24 reasons discussed below, the Court GRANTS Defendant’s Motion to Dismiss. Plaintiff 25 is GRANTED leave to amend the claims for wrongful foreclosure, violations of the UCL 26 and cancellation of instruments. Plaintiff is DENIED leave to amend his HBOR claims. 27 //// 28 //// 2 The facts and procedural history are known to the Parties. (See April Order 3 (ECF No. 12) at 2–3.) Plaintiff, Thomas Mattos, brings the instant suit against 4 Defendant, Nationstar Mortgage LLC d/b/a Mr. Cooper, following the foreclosure of 5 the property located at 266 E. Fig Lane, Corning, CA 96021 (“the Property”). (See 6 generally FAC (ECF No. 13).) Plaintiff alleges that Defendant violated sections 2923.5 7 and 2924.9 of the California Homeowners Bill of Rights (“HBOR”), wrongfully 8 foreclosed on Plaintiff, and violated the Unfair Competition Law. Plaintiff also seeks a 9 cancellation of written instruments under California Civil Code § 3412. (Id.) 10 This Court previously granted in part Defendant’s Motion to Dismiss with leave 11 to amend. (See April Order at 1.) Plaintiff then filed a First Amended Complaint. 12 Defendant again moves to dismiss Plaintiff’s First Amended Complaint without leave 13 to amend. (Mot. Dismiss (ECF No. 14).) Plaintiff filed an Opposition (Opp’n (ECF No. 14 17),) and Defendant issued a Reply (Reply (ECF No. 20),). The matter is fully briefed 15 and submitted on the record and briefs of the Parties, without oral argument, under 16 Local Rule 230(g). (ECF No. 23.) 18 A party may move to dismiss for “failure to state a claim upon which relief can 19 be granted[.]” Fed. R. Civ. P.12(b)(6). The motion may be granted only if “the 20 complaint lacks a cognizable legal theory or sufficient facts to support a cognizable 21 legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 22 2008) (citation omitted). The court assumes all factual allegations are true and 23 construes “them in the light most favorable to the nonmoving party.” Steinle v. City & 24 Cnty. S.F., 919 F.3d 1154, 1160 (9th Cir. 2019) (citation omitted). However, if the 25 complaint’s allegations do not “plausibly give rise to an entitlement to relief” the 26 motion must be granted. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). A complaint 27 need only contain “a short and plain statement of the claim showing that the pleader 28 is entitled to relief[,]” Fed. R. Civ. P. 8(a)(2), not “detailed factual allegations,” Bell. Atl. 1 Corp. v. Twombly, 550 U.S. 544, 555 (2007). That said, this rule demands more than 2 unadorned accusations; “sufficient factual matter” must make the claim at least 3 plausible. Iqbal, 556 U.S. at 678. In the same vein, conclusory or formulaic recitations 4 of elements do not alone suffice. See id. “A claim has facial plausibility when the 5 plaintiff pleads factual content that allows the court to draw the reasonable inference 6 that the defendant is liable for the misconduct alleged.” Id. (citation omitted).1 8 I. HBOR Causes of Action 9 In the April Order, the Court held that Plaintiff failed to allege that he was a 10 borrower for purposes of stating claims under HBOR sections 2923.5, 2924.9, and 11 2924.11. (April Order at 6.) In the amendments to the FAC, Plaintiff now attempts to 12 use sections 2929.5(e)(1) and 2920.7 to argue that successors in interest have a right 13 of action under the HBOR. (FAC ¶ 33, 34.) Defendant moves to dismiss, contending 14 that Plaintiff’s HBOR claims still fail because he is not a “borrower” for purposes of the 15 HBOR. Plaintiff does not substantively respond to Defendant’s argument in his 16 Opposition. 17 In the April Order, this Court already rejected the argument Plaintiff now puts 18 forth pertaining to section 2920.7. Specifically, the April Order stated: 19 The HBOR previously included a provision specifically 20 granting successors in interest certain rights. See Mazzone- 21 Urie v. OneWest Bank FSB, No. 3:21-cv-06075-EMC, 2024 WL 4894288, at *6 (N.D. Cal. Nov. 25, 2024) (explaining the 22 rights a successor in interest previously had under the HBOR). However, that section was repealed in January 23 2020. Cal. Civ. Code § 2920.7 (2019). Since then, 24 district courts within the Ninth Circuit have held that a successor in interest does not have standing under the 25

26 1 The Defendant moves to dismiss on both 12(b)(1) and 12(b)(6) grounds. But given the nature of the arguments presented, the Court finds that the instant Motion is most appropriately resolved under Rule 27 12(b)(6). See, e.g., Lawrence v. Cenlar F.S.B., No. 1:22-cv-01627-JLT-CDB, 2024 WL 4093227, at *2 (E.D. Cal. Sept. 5, 2024); Marasigan v. MidFirst Bank, No. 3:23-cv-00634-H-MMP, 2023 WL 3470128, at 28 *1–2 (S.D. Cal. May 15, 2023). 1 HBOR to bring certain causes of action. See e.g., Mazzone- Urie, 2024 WL 4894288, at *6 (discussing that the plaintiff 2 was not a “borrower” for purposes of her HBOR claim 3 because the rights plaintiff had as a successor in interest were repealed); Duarte v. Rushmore Loan Mgmt. Servs., 4 LLC, No. 5:23-cv-01101-MCS-KK, 2023 WL 9420443, at *3 (C.D. Cal. Dec. 5, 2023) (rejecting Plaintiff’s argument that 5 he can bring an HBOR claim under section 2924.9(a) as a 6 successor in interest based on the more expansive definition of “borrower” used in a different section); 7 Marasigan v. MidFirst Bank, 2023 WL 3470128, at *3 (finding that plaintiff, a successor in interest, did not have 8 standing to bring HBOR claims under section 2923.5 or 9 2924.9 because she was not a borrower under the plain language of the statute). The Court also finds it informative 10 that the HBOR expands the definition of “borrower” to encompass successors in interest in certain provisions but 11 has not done so with respect to the causes of actions 12 brought by the Plaintiff here. Compare Cal. Civ. Code § 2929.5(e)(1) (defining “borrower” for that provision to 13 include “any successor-in-interest of the trustor or 14 mortgagor to the real property”). Given that the Legislature has specified when it intends “borrower” to include 15 successors in interest, its failure to do so for the provisions on which Plaintiff is suing is dispositive. 16 (April Order at 6 (emphasis added).) Plaintiff does not explain how this repealed 17 section can form the basis for a cause of action. 18 As for section 2929.5(e)(1), the Court is not convinced that the definition there 19 applies. Section 2929.5 discusses hazardous substances and inspections by secured 20 lenders. See generally Cal. Civ. Code § 2929.5. The definition of “borrower” that 21 Plaintiff refers to clearly applies only to 2929.5. See Cal. Civ. Code § 2929.5(e)(1) 22 (explaining that the section’s definition of “borrower” applies “for purposes of this 23 section”). Plaintiff is not alleging a violation of section 2929.5. Thus, this section does 24 not support Plaintiff’s claim that he is a borrower for purposes of the HBOR sections he 25 alleges Defendant violated. 26 Without any other argument or authority supporting Plaintiff’s argument that he 27 is the borrower, the Court finds that Plaintiff failed to state a cause of action for 28 1 violations of HBOR sections 2923.5 and 2924.9. Defendant’s Motion to Dismiss the 2 HBOR causes of action are GRANTED. Given that Plaintiff has been given an 3 opportunity to cure this defect and has been unable to do so, Plaintiff will not be given 4 an opportunity to amend. 5 II. Wrongful Foreclosure 6 Defendant next argues that Plaintiff’s wrongful foreclosure claim also fails as it is 7 derivative of the HBOR claims. (MTD at 8.) Defendant further argues that without 8 such claims as a predicate, Plaintiff has only set forth conclusory allegations and failed 9 to allege compliance with, or excuse from the tender requirement. (Id.) Plaintiff 10 argues that the wrongful foreclosure claim should proceed because the sale is void 11 such that the tender rule does not apply. (Opp’n at 9–10.) 12 To state a claim for wrongful foreclosure under California law, a plaintiff must 13 allege: “(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully 14 oppressive sale of real property pursuant to a power of sale in a mortgage or deed of 15 trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) 16 was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges 17 the sale, the trustor or mortgagor tendered the amount of the secured indebtedness 18 or was excused from tendering.” Miles v. Deutsche Bank Nat’l Tr. Co., 236 Cal. App. 19 4th 394, 408 (2015) (citation omitted). “[M]ere technical violations of the foreclosure 20 process will not give rise to a tort claim; the foreclosure must have been entirely 21 unauthorized on the facts of the case.” Sciarratta v. U.S. Bank Nat’l Ass’n, 247 Cal. App. 22 4th 552, 562 (2016) (citation omitted). 23 To the extent that Plaintiff asserts that Defendant wrongfully foreclosed in 24 violation of HBOR sections 2923.5, 2924.9, and 2924.112, the Court finds that those 25 are insufficient bases for the reasons addressed above, supra § I.3 Plaintiff also cites to

26 2 Plaintiff references HBOR section 2924.11 but does not bring a cause of action alleging that section of 27 the HBOR was violated in the FAC. 28 3 The FAC’s various references to RESPA further are insufficiently pled to serve as a basis for liability. 1 HBOR section 2923.55(a) as a basis for the wrongful foreclosure in the FAC. 2 (FAC ¶ 82.) But that section also pertains to “borrowers.” Plaintiff has not provided a 3 plausible argument as to how he, as a successor in interest, is considered a borrower 4 for the purposes of that section. In fact, section 2920.5 provides the same definition 5 for borrower as it does for sections 2923.5, 2924.9 and 2924.11.4 Thus, section 6 2923.55(a) also does not provide a basis for wrongful foreclosure. Because Plaintiff 7 has failed to assert viable HBOR claims or sufficiently provided allegations to support 8 finding an “illegal, fraudulent, or willfully oppressive sale” occurred, Miles, 236 Cal. 9 App. 4th at 408, Defendant’s Motion to Dismiss the wrongful foreclosure claim is 10 GRANTED.5 See Martinez v. Freedom Mortg. Corp., No. 2:24-cv-08716-HDV-MAR, 11 2025 WL 1712362, at *2 (C.D. Cal. Mar. 20, 2025) (denying a wrongful foreclosure 12 claim where the plaintiff failed to allege a viable HBOR claim and the only allegations 13 about the wrongfulness of the foreclosure referred to defendant’s failure to comply 14 with the HBOR). 15 III. UCL Claims 16 Defendant next argues that Plaintiff’s UCL claims fail because they are 17 predicated on other failed causes of action and rely on assertions of “negligent 18 conduct” that are not properly supported. (MTD at 10.) Plaintiff contends that the 19 UCL claims are adequately pled. (See Opp’n at 12–13.)6 20 The UCL prohibits any “unlawful, unfair or fraudulent business act. . . .” Cal. Bus. 21 & Prof. Code § 17200. A defendant violates the UCL if its act is “unlawful,” “unfair” or 22 “fraudulent.” See McGarvey v. JP Morgan Chase Bank, N.A., No. 2:13-cv-01099-KJM-

23 4 Section 2920.5 defines a borrower as “any natural person who is a mortgagor or trustor and who is 24 potentially eligible for any federal, state, or proprietary foreclosure prevention alternative program offered by, or through, his or her mortgage servicer.” Cal. Civ. Code § 2920.5. 25 5 Plaintiff’s arguments that he is excused from tender are inapposite where he has not alleged a basis 26 for wrongful foreclosure. 27 6 In the April Order, the Court held that Plaintiff stated a plausible UCL unfairness claim. (April Order at 11–13.) The Court will not address any arguments as to the unfairness prong made in the instant 28 Motion or Opposition. 1 EFB, 2013 WL 5597148, at *7 (E.D. Cal. Oct. 11, 2013) (quoting Rubio v. Capitol One 2 Bank, 613 F.3d 1195, 1203 (9th Cir. 2010)). The statute is disjunctive such that “[e]ach 3 prong of the UCL is a separate and distinct theory of liability[.]” Lozano v. AT&T 4 Wireless Servs., Inc., 504 F.3d 718, 731 (9th Cir. 2007). 5 As with the previous complaint, Plaintiff has failed to show that Defendant 6 violated an underlying cause of action such that the UCL unlawfulness prong would 7 apply. See Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163, 180 8 (1999) (“By proscribing any unlawful business practice, section 17200 borrows 9 violations of other laws and treats them as unlawful practices that the unfair 10 competition law makes independently actionable.”). Along with the failed HBOR 11 claims, the FAC includes references to Real Estate Settlement Procedures Act (RESPA). 12 (See FAC ¶¶ 41–42.) However, Plaintiff has not sufficiently pled a violation of the 13 RESPA7 such that the Court could use that as basis to support a UCL unlawfulness 14 claim. 15 As for the UCL fraud claim, in the April Order, this Court found that Plaintiff had 16 not adequately pled actual reliance on Defendant’s alleged fraudulent behavior. 17 (April Order at 10.) Defendant contends that the Plaintiff has abandoned his UCL 18 fraud claim and again fails to allege actual reliance or conduct that could deceive 19 members of the public. (MTD at 12.) In the Opposition, Plaintiff appears to argue that 20 he need only describe a scheme to mislead consumers. (Opp’n at 12.) 21 In the FAC, Plaintiff has included an allegation that as a result of the 22 Defendant’s “violations” he suffered the loss of his home.8 (FAC ¶ 107.) Yet the FAC 23 still lacks sufficient information to show actual reliance. See Rojas-Lozano v. Google, 24 Inc., 159 F. Supp. 3d 1101, 1114 (N.D. Cal. 2016) (finding that plaintiff did not plead

25 7 Rather, Plaintiff references the RESPA in the general allegations of the FAC. (See FAC ¶¶ 41–42.) 26 8 It is also unclear to the Court which “violations” Defendant refers to. The general allegations focus 27 primarily on the Plaintiff’s attempts to become confirmed as a successor in interest. However, the UCL cause of action mentions the status of a loan modification application. Should the Plaintiff amend his 28 Complaint, clarification on whether a loan modification application was submitted should be included. 1 actual reliance where plaintiff “failed to allege what she saw, what she believed as a 2 result, [or] how knowledge would impact her behavior. . .”). As it appears to the 3 Court, the allegations supporting the UCL claim reference a loan modification 4 application. However, the general allegations in the FAC indicate that Plaintiff “was 5 not able to apply for loss mitigation or other foreclosure alternatives.” (FAC ¶ 38.) As 6 such, it does not appear that Plaintiff was under the impression that he was being 7 evaluated for a loan modification, and thus there is no allegation of reliance on any 8 misstatement. Accordingly, Defendant’s Motion to Dismiss Plaintiff’s UCL claims as to 9 the unlawfulness and fraudulence prongs are GRANTED with leave to amend. 10 IV. Cancellation of Instruments 11 Lastly, Defendant argues that Plaintiff’s cancellation of instruments cause of 12 action fails because it is based on failed HBOR allegations. (MTD at 12–13.) “A written 13 instrument, in respect to which there is a reasonable apprehension that if left 14 outstanding it may cause serious injury to a person against whom it is void or 15 voidable, may, upon his application, be so adjudged, and ordered to be delivered up 16 or canceled.” Cal. Civ. Code § 3412. To make this showing, “a plaintiff must prove (1) 17 the instrument is void or voidable due to, for example, fraud; and (2) there is a 18 reasonable apprehension of serious injury including pecuniary loss or the prejudicial 19 alteration of one’s position.” U.S. Bank Nat’l Ass’n v. Naifeh, 1 Cal. App. 5th 767, 778 20 (2016) (citation omitted). 21 To the extent that Plaintiff bases his cancellation of instruments claim on HBOR 22 sections 2923.55 and/or 2924.9, the Court has found those claims are not viable. 23 Plaintiff also alleges that Defendant improperly recorded the Notice of Trustee’s Sale 24 less than 90 days after recording the Notice of Default in violation of California Civil 25 Code § 2924. (FAC ¶ 116.) However, the FAC has not adequately explained the 26 requirements of that section or how the timing of the recording violates section 2924. 27 As such, the Court cannot find that Plaintiff has plausibly stated a claim for cancellation 28 of instruments and the claim is dismissed with leave to amend. 1 V. Leave to Amend 2 Requests for leave to amend should be granted with “extreme 3 liberality.” Brown v. Stored Value Cards, Inc., 953 F.3d 567, 574 (9th Cir. 2020) 4 (citations omitted). When considering whether to grant leave to amend, a district 5 court should consider several factors including undue delay, the movant's bad faith or 6 dilatory motive, repeated failure to cure deficiencies by amendments previously 7 allowed, undue prejudice to the opposing party, and futility. Id. (citing Foman v. 8 Davis, 371 U.S. 178, 182 (1962)). Of the Foman factors, prejudice to the opposing 9 party carries the most weight. Id. (citing Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 10 1048, 1052 (9th Cir. 2003)). Absent prejudice, or a strong showing of any of the 11 remaining Foman factors, there exists a presumption under Rule 15(a) in favor of 12 granting leave to amend. Eminence Cap., LLC, 316 F.3d at 1052 (emphasis in original) 13 (citing Lowrey v. Texas A & M Univ. Sys., 117 F.3d 242, 245 (5th Cir. 1997)). However, 14 when the district court has already afforded a plaintiff an opportunity to amend the 15 complaint, it has “wide discretion in granting or refusing leave to amend after the first 16 amendment, and only upon gross abuse will [its] rulings be disturbed.” Rich v. 17 Shrader, 823 F.3d 1205, 1209 (9th Cir. 2016) (citations omitted). “The district court's 18 discretion to deny leave to amend is particularly broad where plaintiff has previously 19 amended the complaint.” Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 20 1990). 21 Here, the Court cannot conclude that Plaintiff’s wrongful foreclosure, UCL, and 22 cancellation of instruments causes of action “could not possibly be cured by the 23 allegation of other facts,” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en 24 banc) (internal quotation marks and citations omitted), and will accordingly grant 25 leave to amend. That said, the Court notes that this would be the second time Plaintiff 26 is granted leave to amend, and that Plaintiff has largely failed to cure the defects from 27 the initial complaint. Plaintiff is warned that further leave to amend will not be granted 28 without good cause being shown. 2 For the foregoing reasons, Defendant's Motion to Dismiss (ECF No. 14) is 3 | GRANTED without leave to amend as to Plaintiff's HBOR claims and with leave to 4 | amend Plaintiff's wrongful foreclosure, UCL, and cancellation of instruments claims. 5 | Plaintiff shall file a Second Amended Complaint within twenty-one days of this Order. 6 j IT IS SO ORDERED. 8 | Dated: _ August 25, 2025 “Dane J CoO □□□□ Hon. Daniel alabretta ? UNITED STATES DISTRICT JUDGE 10 11 12 13 | DJC6 - MATTOS24cv02508.mtd_v4 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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