McAdams v. Nationstar Mortgage LLC

[8] 9 UNITED STATES DISTRICT COURT 10 FOR THE SOUTHERN DISTRICT OF CALIFORNIA PIA MCADAMS, on behalf of herself Case No. 3:20-cv-2202-L-BLM 11 || and those similarly situated, ORDER GRANTING IN PART 12 Plaintiff, AND DENYING IN PART DEFENDANT’S MOTION TO 13 V. DISMISS 14 || NATIONSTAR MORTGAGE LLC d/b/a MR. COOPER, a Delaware limited 15 || liability company, 16 Defendant. [18] 9 Plaintiff Pia McAdams brings this dispute against Nationstar Mortgage LLC d/b/a Mr. Cooper (“Defendant”). First Amended Complaint (“FAC’’) Doc. No. 17 1 at 1.' Plaintiff alleges five claims against Defendant: (1) violation of California’s 0 Homeowner Bill of Rights; (2) intentional misrepresentation; (3) negligent 33 misrepresentation; (4) promissory estoppel; and (5) violation of California’s Unfair Competition Law. FAC 116-67. Defendant moves to dismiss the claims 35 pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. No. 20-1 (“MTD”) at 8. Plaintiff filed an opposition to Defendant’s motion, and Defendant replied. Doc. 4 No. 22; Doc No. 23. For the reasons set forth below, the Court GRANTS IN ||. — ' All citations to electronically filed documents refer to the pagination assigned by the CM/ECF system. 1 | PART AND DENIES IN PART Defendant’s motion to dismiss. 2 I. | BACKGROUND’ 3 Plaintiffs amended complaint originates from Defendant’s alleged 4 |) misconduct during the loan modification and foreclosure process. FAC □ 1. 5 || Plaintiff alleges that Defendant falsely led Plaintiff to believe that Defendant was 6 || processing Plaintiff's loan modification application instead of going through with 7 || the foreclosure process. See id. J 63. This deceptive and illegal practice, known as 8 || “dual tracking,” is the basis for all of Plaintiff’s claims. See id. J 76-78, 128-30, 9 || 140-42, 148, 162. 10 Plaintiff purchased her former home in August 2004. Jd. § 15. The home 11 || was purchased “with a loan obtained from American Wholesale Lender, Inc.” Jd. 12 || Defendant was the mortgage servicer to Plaintiff’s loan. Id. 4 17. 13 Plaintiff received her first loan modification from Defendant in October 14 || 2010. Id. § 18. A few years later, in April 2014, Plaintiff defaulted on her loan. Id. 15 || § 19. Two years later, in December 2016, Plaintiff entered a second loan 16 || modification with Defendant. /d. 921. Unfortunately, Plaintiffs financial 17 || difficulties continued over the next several years. See id. 4] 25-28. Again, in 18 || November 2018, Plaintiff defaulted on her loan and requested a third loan 19 || modification from Defendant. Id. 9] 27, 29. 20 In December 2018, Defendant sent Plaintiff the Borrower Response Package 21 || (“Package”). Id. 430. Defendant uses the Package to assess whether a loan 22 || modification is necessary. See id. | 32-35. The Package requests several 23 || documents, including income documentation. Id. §] 33, 35. The Package 24 || “instructed [Plaintiff] to complete the attached documents by January 21, 2019.” 25 || Id. 431. The Package also stipulated: 26 || // [27] 28 2 Because this matter is before the Court on a motion to dismiss, the Court must accept as true the allegations set forth in the amended complaint. See Hosp. Bldg. Co. v. Trs. Of Rex Hosp., 425 U.S. 738, 740 (1976). > FASANO IAD ODT A 1 Once we receive your application, we will provide you with an acknowledgment to let you know whether your 2 application is complete or whether documentation or 3 information is missing. In the event information is missing and the application has not been received too close to a 4 scheduled foreclosure sale to permit us to evaluate your 5 application, we will provide you with a reasonable date within which the missing information must be provided to 6 us. 7 . . . Prior to our receipt of the missing/complete documents, a 8 foreclosure process may be initiated or if the foreclosure 9 has already been initiated, the foreclosure process will continue until all documents are received unless state law 10 provides otherwise. [11] Id. 4 32 (quoting the Package) (emphasis omitted). [12] 13 Plaintiff submitted the requested documents on January 16, 2019. Id. □ 37. 14 | Defendant did not reply until February 14, 2019. Id. 9 41. Defendant’s response 15 | indicated that Plaintiffs application was incomplete because her income 16 | documentation was “‘illegible[]’ and needed to be resubmitted.” Id. { 42. 17 || Defendant requested that Plaintiff resubmit her income documentation by March 18 | 15,2019. 7d. Plaintiff resubmitted her income documentation on March 8, 2019. 19 | Id. | 47. Within days, Defendant responded and claimed that the income 20 || documentation was still incomplete. Jd. 48-49. Defendant encouraged Plaintiff 21 || to resubmit the income documentation by April 7, 2019. Id. 952; see also id. at 81. 22 || Nonetheless, on March 22, 2019, before Plaintiff submitted her income 23 || documentation for the third time, Defendant sold Plaintiff’s home in a foreclosure 24 || sale. Id. 955; see also id. at 85. 25 Relatedly, Plaintiff was a class member in a class action lawsuit (“Class 26 || Action”) against Defendant. See Doc. No. 20-9 at 1; see also Doc. No. 20-11 at 1. 27 || The Class Action was filed by class representatives Demetrius and Tamara 28 || Robinson (“Robinsons”) in the U.S. District Court for the District of Maryland. 1 | Doc. No. 20-7 at 1. 2 The Robinsons believed that Defendant, as the Robinsons’ mortgage 3 || servicer, wronged them throughout the loss mitigation process in the following 4 || ways. See id. J§ 60-89. First, the Robinsons alleged that Defendant failed to give 5 || them any sort of meaningful correspondence in a timely fashion. Id. 67, 68, 73, 6 || 74, 76. Second, the Robinsons alleged that Defendant failed to evaluate all loan 7 || modification options for the Robinsons and failed to give the reasons why the 8 || Robinsons were not entitled to certain loan modification options. Id. J§ 68, 70, 82, 9 || 83. Altogether, these alleged wrongdoings “delayed the loss mitigation process and 10 || caused the Robinsons to refrain from looking into other loss mitigation options.” 11 || Id. § 87. 12 In addition, the Robinsons alleged on behalf of the class that Defendant 13 || violated 12 C.F.R. § 1024.41 by “instituting foreclosure proceedings while a loss 14 || mitigation application or appeal is . . . being processed,” or, “dual tracking”. Id. 15 || 58. However, the Maryland District Court entered summary judgment in favor of 16 || Defendant for this dual tracking claim since Defendant had not begun the 17 || foreclosure process against the Robinsons. Doc. No. 22-3 at 17-18. 18 The Class Action concluded with a court approved settlement. Doc. No. 2019 | 10 at 1. The settlement released Defendant from: [20] [A]ll actions, causes of action, claims, demands, 21 obligations, or liabilities of any and every kind that were or 09 could have been asserted by the Class Representative or Class Members in connection with the submission of loss 23 mitigation applications during the Class Period. This release includes, but is not limited to, claims for statutory or regulatory violations, the Real Estate Settlement 25 Procedures Act, Regulation X, the Maryland Consumer 26 Protection Act, unfair, abusive, or deceptive act or practice claims, tort, contract, or other common law claims, or 27 violations of any other related or comparable federal, state, 28 or local law, statute, or regulation. Doc. No. 20-8 Ex. 1 at 21. 3 Despite this release, Plaintiff brings five claims as noted above: (1) violation of California’s ‘ Homeowner Bill of Rights; (2) intentional misrepresentation; (3) negligent ° misrepresentation; (4) promissory estoppel; and (5) violation of California’s Unfair Competition Law. AC 4§ 116-67. Defendant moves to dismiss these claims pursuant to Federal Rule of Civil Procedure 12(b)(6). MTD at 8. Il. LEGAL STANDARD Under Federal Rule of Civil Procedure 12(b)(6), a motion to dismiss tests the 10 sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is warranted where the complaint lacks a cognizable legal theory. 12 Shroyer v. New Cingular Wireless Serv., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (citation omitted); see Neitzke v. Williams, 490 U.S. 319, 326 (1989) (“Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law’). Alternatively, a complaint may be dismissed where it presents a cognizable '6 legal theory yet fails to plead essential facts under that theory. Robertson v. Dean M Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984); see also Shroyer, 622 F.3d 18 at 1041. In this regard, “to survive a motion to dismiss, a complaint must contain sufficient factual matter to state a facially plausible claim to relief.” Shroyer, 622 | F.3d at 1041 (citing Ashcroft v. Igbal, 556 U.S. 662, 678 (2009)). “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 3 alleged.” Ashcroft, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). iI. JUDICIAL NOTICE As an initial matter, Plaintiff and Defendant request that the Court take judicial notice of several exhibits. See Doc. No. 20-2 at 2-3; see also Doc. No. 2228 1 || 4 at 2. 2 || A. LEGAL STANDARD 3 “Generally, district courts may not consider material outside the pleadings 4 || when assessing the sufficiency of a complaint under Rule 12(b)(6).” Khoja v. 5 || Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018) (citing Lee v. City 6 || of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001), overruled on other grounds 7 || by Galbraith v. County of Santa Clara, 307 F.3d 1119, 1125-26 (9th Cir. 2002)). 8 || However, “a court may take judicial notice of matters of public record,” Khoja, 899 9 || F.3d at 999 (quoting Lee, 250 F.3d at 689 ), and of “documents whose contents are 10 || alleged in a complaint and whose authenticity no party questions, but which are not 11 || physically attached to the pleading,” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 12 || 1994), overruled on other grounds by Galbraith, 307 F.3d at 1125-26 ; see 13 || also Fed. R. Evid. 201. A judicially noticed fact must be one not subject to 14 || reasonable dispute in that it is either (1) generally known within the territorial 15 || jurisdiction of the trial court or (2) capable of accurate and ready determination by 16 || resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 17 || 201(b); see also Khoja, 899 F.3d at 999 (quoting Fed. R. Evid. 201(b)). 18 || B. DISCUSSION 19 The Court considers the parties’ requests in the order they were presented. 20 1. Defendant’s Request for Judicial Notice 21 Defendant asks the Court to take judicial notice of nine exhibits. See Doc. 22 || No. 20-2 at 2-3. 23 Exhibit one is Plaintiff’s first loan modification agreement. See Doc. No. 2024 || 3; see also Doc. No. 20-2 at 2. “A court may take judicial notice of matters of 25 || public record.” Khoja, 899 F.3d at 999 (quoting Lee, 250 F.3d at 689 ). This 26 || agreement is public record because it was recorded with the San Diego County 27 || Recorder’s Office. Doc. No. 20-2 at 2. Thus, judicial notice is appropriate for 28 || exhibit one. 1 Exhibit four is public information displayed on the California Department of 2 || Financial Protection and Innovation website. California Department of Business 3 || Oversight, Annual Report of Activity Under the California Residential Mortgage 4 || Lending Act (2019), https://dfpi.ca.gov/wp5 || content/uploads/sites/337/2020/07/2019-CRMLA-Annual-Aggregated-Report.pdf. 6 || The Court may take judicial notice of public information displayed on government 7 || websites when “neither party disputes the authenticity of the website[] or the 8 || accuracy of the information displayed therein.” Daniels-Hall v. Nat’l Educ. Ass’n, 9 | 629 F.3d 992, 998-99 (9th Cir. 2010). Because neither party disputes the 10 |) authenticity of the website or the accuracy of the information judicial notice is 11 || appropriate for exhibit four. Daniels-Hall, 629 F.3d at 998-99 . 12 Exhibits two and three are documents that were filed with the U.S. 13 || Bankruptcy Court for the Southern District of California. See Doc. Nos. 20-4, 2014 || 5; see also Doc. No. 20-2 at 2. Exhibits five through nine are all documents that 15 || were filed with the Maryland District Court. See Doc. Nos. 20-7, 20-8, 20-9, 2016 || 10, 20-11; see also Doc. No. 20-2 at 2-3. Court documents are public record and 17 || available for judicial notice. Victoria v. City of San Diego, 326 F. Supp. 3d 1003 , 18 | 1012 (S.D. Cal. 2018). Thus, judicial notice is appropriate for exhibits two, three, 19 || and five through nine. 20 2. Plaintiff’s Request for Judicial Notice 21 Plaintiff asks the Court to take judicial notice of two exhibits. See Doc. No. 22 || 22-4 at 2. 23 Both exhibits are documents that were filed with the Maryland District Court. 24 || See Doc. Nos. 22-2, 22-3. Thus, judicial notice is appropriate for exhibit one and 25 || two. See Victoria, 326 F. Supp. 3d at 1012 . 26 || // 27 || // 28 || // 1 IV. DISCUSSION 2 Defendant argues that Plaintiff’s claims are barred by claim preclusion. Jd. 3 || Alternatively, Defendant argues that each claim should be dismissed on independent 4 | grounds. Jd. at 8-9. 5 A. CLAIM PRECLUSION 6 Defendant first argues that Plaintiff's claims are barred because Plaintiff 7 || released her claims in the Class Action settlement agreement. /d. at 13-15; Doc. 8 || No. 23 at 3-7. Plaintiff counters that the settlement agreement does not bar her 9 || current claims because they are not “based on the identical factual predicate as [the] 10 || underlying . . . claims in the settled class action.” Doc. No. 22 at 13 (quoting 11 || Williams v. Boeing Co., 517 F.3d 1120, 1133 (9th Cir. 2008)). 12 “The preclusive effect of a federal-court judgment is determined by federal 13 || common law,” when subject matter jurisdiction in the prior case is based on federal 14 || question rather than diversity. Taylor v. Sturgell, 553 U.S. 880 , 891 & n.4 (2008). 15 || Under the federal doctrine of claim preclusion, “a final judgment forecloses 16 || successive litigation of the very same claim, whether or not relitigation of the claim 17 || raises the same issues as the earlier suit.” /d. at 892 (internal quotation marks and 18 || citation omitted). Accordingly, claim preclusion may be brought under Federal 19 || Rule of Civil Procedure 12(b)(6). See, e.g., Rosenblum v. U.S. Bank, Nat’l Ass’n, 20 || 822 F. App’x 621 , 622 (9th Cir. 2020). 21 1. Inadequate Representation 22 For a settlement agreement to have preclusive effect, the underlying class 23 || representative must have adequately represented Plaintiff. See Hesse v. Sprint 24 | Corp., 598 F.3d 581, 588 (9th Cir. 2010). Plaintiff argues that the Robinsons did 25 || not adequately represent her because the Robinsons could not advance their dual 26 || tracking claims past summary judgment. Doc. No. 22 at 14-15. Defendant does 27 || not address this argument in their reply brief. See generally Doc. No. 23. 28 “Class representation is inadequate if the named plaintiff fails to prosecute 1 || the action vigorously on behalf of the entire class.” Hesse, 598 F.3d at 589 . A 2 || class representative cannot “prosecute the action vigorously” if they do not share 3 || the same claims as class members. See id. Here, each of Plaintiff’s claims are 4 || based on the allegation that Defendant was working with Plaintiff to modify the 5 || loan but then simultaneously foreclosed on her home, 1.e., dual tracking. See AC {J 6 || 9-10. In the Class Action, the Maryland District Court entered summary judgment 7 || against the Robinsons for their dual tracking claims. Doc. No. 22-3 at 17-18. In 8 || doing so, the Maryland District Court found that the Robinsons had no evidence of 9 | dual tracking, and that the Robinsons’ house had not even been foreclosed. Id. 10 || Clearly, Plaintiffs claims were not shared with the Robinsons. Therefore, the 11 |) Robinsons failed to “prosecute the action vigorously.” Hesse, 598 F.3d at 589 . 12 The Robinsons did not adequately represent Plaintiff in the Class Action 13 || regarding the dual tracking claims. Accordingly, the settlement agreement cannot 14 || have preclusive effect. 15 2. Identity of Claims 16 Even though the Robinsons were inadequate class representatives, the 17 || settkement agreement does not bar Plaintiff's claims for another reason. Settlement 18 || agreements can release a plaintiff’s claim only if a traditional claim preclusion 19 || analysis has been decided in a defendant’s favor. See id. at 590 (“Even apart from 20 || [inadequate representation], a settlement agreement’s bare assertion that a party will 21 |) not be liable for a broad swath of potential claims does not necessarily make it □□□□□ 22 || see also Cell Therapeutics, Inc. v. Lash Grp., Inc., 586 F.3d 1204, 1210-12 (9th 23 || Cir. 2009). 24 “Claim preclusion ‘applies when there is (1) an identity of claims; (2) a final 25 || judgment on the merits; and (3) identity or privity between the parties.’” Cell 26 || Therapeutics, Inc., 586 F.3d at 1212 (9th Cir. 2009) (quoting Stewart v. U.S. 27 || Bancorp, 297 F.3d 953, 956 (9th Cir. 2002)). 28 || // 1 Defendant contends that the second and third elements have been met. MTD 2 | at 13, 15. Plaintiff does not argue otherwise. See generally Doc. No. 22 at 11-15. 3 || The Court agrees with Defendant in that the Class Action settlement was “a final 4 || judgment on the merits” and that there is “identity or privity between the parties.” 5 || Stewart, 297 F.3d at 956 . Thus, the Court must only assess whether there is “an 6 || identity of claims.” Id. 7 To determine if there is an “identity of claims,” we look to four factors, “which we do not apply mechanistically”: “(1) 8 whether the two suits arise out of the same transactional 9 nucleus of facts; (2) whether rights or interests established in the prior judgment would be destroyed or impaired by 10 prosecution of the second action; (3) whether the two suits ll involve infringement of the same right; and (4) whether substantially the same evidence is presented in the two 12 actions.” ? 13 Garity v. APWU Nat’l Lab. Org., 828 F.3d 848, 855 (9th Cir. 2016) (quoting 14 || Mpoyo y. Litton Electro-Optical Sys., 430 F.3d 985, 987 (9th Cir. 2005)). 15 Plaintiffs claims and the Robinsons’ claims have some factual overlap, 16 || which in turn gives rise to similar infringements and evidence. See, e.g., AC 4] 4917 || 50; see also Doc. No. 20-7 9] 74-76. But there is no doubt that there is not an 18 || identity of claims. Plaintiff's claims are predicated on dual tracking. See AC JJ 919 || 10. Dual tracking requires going through the loan modification process and the 20 || foreclosure process. Id. 478. The Robinsons could not bring dual tracking claims 21 || because, although they went through the loan modification process, Defendant did 22 || not push the Robinsons through the foreclosure process. Doc. No. 22-3 at 17-18. 23 || Hence, Plaintiff and the Robinsons are not alleging infringement of the same right. 24 || Further, the Robinsons’ claims did not include any facts related to foreclosure, 25 || which are essential to Plaintiff's claims. In proving these facts, Plaintiff will 26 || ——— 3 These factors clarify the disagreement between Plaintiff and Defendant as to what constitutes an “identity of 27 || claims.” Compare Doc. No. 22 at 13-15 (asserting that an “identity of claims” requires an “identical factual predicate”) with Doc. No. 23 at 3-7 (arguing that the “identical factual predicate” standard is incorrect, and that the 28 Court should instead test whether the claims “[a]rise [oJut of the [s]ame [n]ucleus of [o]perative [f]act[s]’”). 1 || necessarily present different evidence than the Robinsons. 2 This analysis is like the inadequate representation analysis above. This is 3 || because “[i]t [is] unlikely that a plaintiff[’s] . . . claims would ever be based on the 4 || identical factual predicate as the claims of a third party who did not adequately 5 || represent the class’s interests.” Hesse, 598 F.3d at 592 . Accordingly, Plaintiff's 6 || claims are not barred under a traditional claim preclusion analysis, and the Court 7 || turns to the merits. 8 B. HOMEOWNER’S BILL OF RIGHTS (HBOR) 9 California’s Homeowner’s Bill of Rights was enacted on January 1, 2013, and 10 || “reformed aspects of the state’s nonjudicial foreclosure process by amending the 11 |) California Civil Code to prohibit deceptive and abusive home foreclosure practices.” 12 || Bingham v. Ocwen Loan Serv., LLC, 2014 WL 1494005 (N.D. Cal. 2014). The 13 || statute states in pertinent part: [14] 15 If a borrower submits a complete application for a first lien loan modification offered by, or through, the 16 borrower's mortgage servicer at least five business days 7 before a scheduled foreclosure sale, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall 18 not record a notice of default or notice of sale, or conduct 19 a trustee's sale, while the complete first lien loan modification application is pending. A mortgage servicer, 20 mortgagee, trustee, beneficiary, or authorized agent shall 1 not record a notice of default or notice of sale or conduct a trustee's sale until any of the following occurs. . . (3) 22 The borrower accepts a written first lien loan 23 modification, but defaults on, or otherwise breaches the borrower's obligations under, the first lien loan 24 modification. [25] Cal. Civ. Code. § 2923.6(c). // [27] // [28] 1 To avoid dilatory action by borrowers, the HBOR further provides: [2] 3 In order to minimize the risk of borrowers submitting 4 multiple applications for first hen loan modifications for the purposes of delay, the mortgage servicer shall not be 5 obligated to evaluate applications from borrowers who have been evaluated or afforded a fair opportunity to be 6 evaluated consistent with the requirements of this section, 7 unless there has been a material change in the borrower's 3 financial circumstances since the date of the borrower's previous application and that change is documented by 9 the borrower and submitted to the mortgage servicer. [10] Cal. Civ. Code § 2923.6 (g)(emphasis added). [11] Defendant contends that section 2923.6(g) of the Homeowner’s Bill of Rights [12] does not apply because Plaintiff defaulted on two previous loan modifications. MTD [13] at 9. Defendant also claims that section 2923.6 does not apply because Plaintiff did [14] not provide sufficient documentation of her alleged change in financial [15] circumstances. /d. at 10. According to Defendant, Plaintiff's “hardship letter did not [16] notify Nationstar of any material change in financial circumstances that occurred [17] since her previous loan modification [in 2016] as required by Section 2923.6(g).” Id. [18] at 11. [19] In response, Plaintiff argues that her previous defaults do not affect the [20] applicability of the HBOR because section 2923.6(g) requires lenders like Defendant [21] to comply with HBOR where a borrower provides documentation of a change in [22] financial circumstances, like she had, that occurred after the date of the previous [23] application. Oppo. at 10-11. She argues that she submitted a letter of hardship around [24] January 16, 2019, in which she described a loss of income after her April 2015 [25] bankruptcy and she submitted paystubs documenting the decrease along with a [26] breakdown of her monthly expenses that reflected net monthly income of $556. [27] Oppo. at 11. [28] 1 The HBOR does not directly address whether a borrower who has previously 2 || defaulted on a prior loan modification is exempt from its protections. An unpublished 3 || decision from the Ninth Circuit suggests that the statue requires dismissal of HBOR 4 | claims if a borrower has “defaulted under the original loan agreement and defaulted 5 || again under the loan Modification Agreement (a ‘first lien loan modification’ ).” 6 || Deschaine v. IndyMac Mortg. Services, 617 Fed.Appx. 690, 694 (9th Cir. 2015). 7 || However, a close reading of this provision indicates that it arguably does not look 8 || back to prior loan modifications, but instead is forward-looking because it states that 9 || a mortgage servicer will not conduct a trustee’s sale “until” a borrower defaults on a 10 || loan modification. At least one district court has interpreted the statute in this way, 11 | holding that it does not apply to past defaults, but only to the current loan 12 || modification application because it “focuses exclusively on future developments that 13 || occur after the borrower submits the loan modification application that the lender 14 || dual tracks.” Shaw v. Specialized Loan Servicing, LLC, 2014 WL 12569530 (C.D. 15 || Cal. 2014). This Court has not discovered any binding authority holding that a prior 16 || default forecloses the applicability of the HBOR, therefore, Plaintiff’s prior defaults 17 || are immaterial to the HBOR analysis for purposes of the present motion to dismiss 18 Regarding Plaintiff’s letter of financial hardship, Plaintiff stated in the FAC 19 || that after the second loan modification, she “lost her primary source of income as a 20 || professor at Central Texas College near the end of 2017.” FAC § 88-89. She 21 |) “included in her letter of hardship a breakdown of her gross monthly income, 22 || expenses and debt payments. This reflected her decrease in income after losing her 23 || teaching position at Central Texas College and showed a monthly net income of 24 || $556.” FAC at ¥ 39. 25 The “Explanation of Hardship” letter from Plaintiff to Defendant is dated January 26 || 16, 2019, and states: 27 // 28 || // 1 My hardship began after my bankruptcy in 2015. My employment is dependent upon classes offered. This is 2 based upon the number of students enrolled and other 3 factors beyond my control. / My intention is to remain living in the property. {| My plan is to get current seeking 4 additional employment in order to make the payments. 5 My last option would be to sell the house. 6 FAC Ex. D at 2. Attached to the letter is an income and expenses worksheet, in 7 | which she lists her income as $2,175.00 and expenses as $1,619.00, without including 8 || the mortgage payment, leaving $556. Id. at 3. Plaintiff states she submitted paystubs ? || to Defendant with her Borrower Response Package in addition to the above materials. 10 The documents above demonstrate that Plaintiff has sufficiently alleged a change 11 | in her financial circumstances. First, she indicated that the hardship began after her 12 bankruptcy in 2015. Next, she explained the reasons for the change, and provided her 13 1 income and expenses, along with her paystubs. It would have benefitted Plaintiff to 14 || include the specific date upon which her employment with Central Texas College 15 || was terminated in the letter, as she alleges that was the cause of her reduced income, 16 | however she alleges in the FAC that she included her paystubs which would 17 | demonstrate the date of the change in income. Haynish v. Bank of Amer., N.A., 284 18 F.Supp. 3d 1037, 1043 (N.D. Cal. 2018)(submission of paystubs demonstrating 19 || decreased income sufficient to satisfy § 2923.6(g) requirement of material change). 20 || Plaintiff has provided “sufficient factual matter” in the FAC “to state a facially 21 plausible claim to relief." Shroyer, 622 F.3d at 1041 . Accordingly, the motion to 22 |! dismiss Plaintiff’s HBOR claim is denied. 23 A. FRAUD 24 Under Rule 9(b), a plaintiff who alleges fraud in the complaint must “state with 25 particularity the circumstances constituting fraud or mistake. Malice, intent, 26 knowledge, and other conditions of a person’s mind may be alleged generally.” Red.R.Civ.P. 9(b). A plaintiff must identify “the time, place, and specific content of 28 | the false representations as well as the identities of the parties to the 1 || misrepresentation.” Odom y. Microsoft Corp., 486 F.3d 541, 553 (9th Cir. 2 | 2007)Gnternal quotation marks omitted). “The elements of a cause of action for 3 || intentional misrepresentation are (1) a misrepresentation, (2) with knowledge of its 4 || falsity, (3) with the intent to induce another's reliance on the misrepresentation, (4) 5 || actual and justifiable reliance, and (5) resulting damage.” Daniels v. Select Portfolio 6 || Serv., Inc., 246 Cal. App. 4th 1150, 1166 (2016). “The elements of a claim for 7 || negligent misrepresentation are nearly identical. Only the second element is different, 8 || requiring the absence of reasonable grounds for believing the misrepresentation to be 9 || true instead of knowledge of its falsity.” Id. 10 Plaintiff's fraud claims for intentional and negligent misrepresentation must be 11 || dismissed, according to Defendant, because they do not identify a specific false 12 || statement Defendant knowingly made, upon which Plaintiff relied when she chose 13 || not to pursue other options to foreclosure. Mot. at 12. As a result, the claims fail to 14 || satisfy the heightened pleading requirements of FRCP 9(b). Jd. Defendant further 15 || argues that “courts do not allow fraud claims based only on a violation of the HBOR.”’ 16 || Reply at 9. 17 According to Plaintiff, the FAC adequately alleges claims for intentional and 18 || negligent misrepresentation because she identified representations made by 19 || Nationstar that stated she must return documents within the specified timeframes to 20 || avoid foreclosure, but it moved forward with the foreclosure despite her submission 21 || of the requested documents. Oppo. at 14. She further claims “[i]n actual and 22 || reasonable reliance upon Defendant’s misrepresentations, Plaintiff submitted and 23 || resubmitted documents to Defendant and did not seek out other options to prevent 24 || the foreclosure of her home.” Jd. at 17. 25 Plaintiff has sufficiently asserted the who, what, when, and why to meet Rule 26 || 9(b)’s pleading requirements. She stated that Nationstar made the statements in the 27 || Borrower’s Response Package explaining they will give homeowners a “reasonable 28 || date within which missing information” must be provided. This statement indicated 1 || that the homeowners had time before the foreclosure sale to comply with the 2 || requirement. See FAC 4 128-134. The pertinent statements in the Borrower Response 3 || Package as identified by Plaintiff state: “In the event information is missing and the 4 || application has not been received too close to a scheduled foreclosure sale to permit 5 || us to evaluate your application, we will provide you with a reasonable date within 6 || which the missing information must be provided to us.” FAC at Ex C. It continues, 7 || “Prior to our receipt of the missing/complete documents, a foreclosure process may 8 || be initiated, the foreclosure process will continue until all documents are received 9 || unless state law provides otherwise.” Id. 10 As Plaintiff describes it, Nationstar twice gave her dates to turn in documents, but 11 |) they simultaneously moved forward with foreclosure proceedings. On February 14, 12 || 2019, Defendant sent Plaintiff a letter giving her until March 15, 2019, to provide her 13 || 1099 Tax Statement, along with “one more paystub to determine your income” and 14 || a new Year to Date Profit and Loss statement because the one they had was 15 || “illegible.” FAC Ex E at 1. Yet, Defendant filed a notice of Trustee’s Sale on 16 || February 19, 2019. FAC at Ex F. 17 Similarly, on March 8, 2019, Defendant sent another letter to Plaintiff, 18 || acknowledging receipt of the paystub, but stating that she needed to send in a letter 19 || of explanation clarifying the information in her Profit and Loss Statement, along with 20 || a statement that it was not in the correct format, and was illegible. FAC Ex. G at 1. 21 || Plaintiff was given until April 7, 2019, to send in the information, yet Defendant 22 || continued with the foreclosure sale on March 22, 2019. From these actions, Plaintiff 23 || has sufficiently demonstrated that Defendant made a misrepresentation of fact about 24 || the time within which she could produce documents and avoid foreclosure 25 || proceedings, and that they intended to induce Plaintiff's reliance on those statements. 26 || Plaintiff reasonably relied on those misrepresentations and suffered damage when the 27 || home was sold in foreclosure. 28 Defendant claims that this Court has previously dismissed fraud claims based 1 | only on violations of the HBOR in Santana vy. BSI Fin. Servs., Inc. 495 F.Supp. 3d 2 | 926, 947-48 (S.D. Cal. 2020), however the cases are distinguishable. In Santana, 3 || Plaintiff alleged Defendant failed to comply with HBOR by “failing to properly 4 |) review Plaintiffs’ loan modification application, failing to provide a written denial 5 || and opportunity to appeal, unlawfully proceeding with a trustee’s sale a day after 6 || Plaintiffs were telephonically informed of the denial, and filing a fraudulent NOD 7 || declaration.” Jd. In dismissing the claims for misrepresentation, the Court found that 8 || the complaint did not sufficiently allege that Defendants made “‘misrepresentations 9 || of fact” or that Defendant “fraudulently concealed a material fact.” Id. 10 In contrast, Plaintiff here has pointed to statements contained within 11 || Defendant’s Borrower’s Package which misrepresent that a borrower may stave off 12 || further negative action by responding to requests for additional information by a date 13 || certain. Those statements convinced Plaintiff that as long as she was complying with 14 || the requests, she did not need to pursue other avenues to avoid foreclosure. Seeming 15 || to acknowledge the misrepresentation, Defendant sent Plaintiff a letter dated April 16 || 11, 2019, in which it stated “[w]e acknowledge that our loan modification document 17 || request letter, dated March 8, 2019, listed a deadline of April 7, 2019, to return the 18 || documents to us. We are currently in the process of attempting to rescind the 19 | foreclosure.” FAC Ex H at 2 (emphasis added). However, Defendant did not rescind 20 || the foreclosure and Plaintiff lost her home because the foreclosure was conducted 21 || before the stated time for compliance expired. In light of the above, Plaintiff has 22 || sufficiently alleged factual content for the Court to draw the reasonable inference that 23 || the defendant is liable for the alleged misconduct. Shroyer, 622 F.3d at 1041 , citing 24 || Ashcroft v. Iqbal, 556 U.S. 662 (2009). For these reasons, Defendant’s motion to 25 || dismiss Plaintiff’s claims for intentional and negligent misrepresentation is denied. 26 B. PROMISSORY ESTOPPEL 27 The elements of promissory estoppel are: (1) a clear and unambiguous 28 || promise, (2) reliance by the party to whom the promise is made, (3) the reliance is 1 || both reasonable and foreseeable, and (4) the party asserting estoppel is injured by his 2 || reliance. U.S. Ecology Inc. v. State of California, 28 Cal. Rptr. 3d 894, 905 (Cal. Ct. 3 || App. 2005). 4 Defendant argues that Plaintiff's promissory estoppel claim must fail because 5 || she has not identified a clear and unambiguous promise Nationstar made, and then 6 || reneged upon. Mot. at 17. Furthermore, Plaintiff has not sufficiently alleged that she 7 || relied upon a promise by Nationstar, and as a result, suffered damages. Reply at 12. 8 Plaintiff counters that Nationstar made a promise to “halt the foreclosure 9 || process upon submission of all documents requested by Nationstar by the ‘reasonable 10 || date’ provided by Nationstar.” Oppo at 18. 11 Missing from the present case is a clear and unambiguous promise by 12 || Nationstar to cease the foreclosure proceedings while Plaintiff was in the loan 13 || modification process of returning requested forms, as Plaintiff alleges. Defendant 14 || promised only that it would provide a “reasonable date” to submit document 15 || requested for the loan modification: “In the event information is missing and the 16 || application has not been received too close to a scheduled foreclosure sale to permit 17 || us to evaluate your application, we will provide you with a reasonable date within 18 || which the missing information must be provided to us.” FAC Ex E at 2 (emphasis 19 || added). This promise was stated in the initial Borrower Response Package sent on 20 || January 21, 2019. Id. Ex C. at 2. 21 In the letter from Defendant to Plaintiff dated February 14, 2021, Defendant 22 || listed items needed to complete the file, and stated 23 || “[w]e encourage you to return the specified documentation to us by 3//5/2019,” and 24 || added “[w]e have provided a reasonable date for your client to return the completed 25 || Borrower Response Package to us. Please note that we may still review the 26 || application if it is received after that date, but the sooner the documents are returned 27 || to us, the better.” Jd. Ex E at 2 (emphasis added). On March 8, 2019, Defendant 28 || sent a letter requesting additional documents, stating that they should be returned by 1 || April 7, 2019, and noting that they had provided a “reasonable date” for the document 2 || return. Id. Ex. G at 2. 3 Although Plaintiff claims Defendant further promised to halt the foreclosure 4 || process upon submission of the requested materials before the “reasonable date,” she 5 || has only identified the above promise, which Defendant met by providing a 6 || “reasonable date” in each correspondence. Accordingly, Plaintiff's promissory 7 || estoppel claim is dismissed without prejudice and with leave to amend. 8 C. UCL CLAIM 9 California’s unfair competition law (UCL) provides for civil recover for “any 10 || unlawful, unfair or fraudulent business act or practice...” Bus. & Prof.Code, § 17200. 11 |) Violations of other laws are actionable as unfair competition under the UCL because 12 || it defines “unfair competition” to include any unlawful act or practice. Cel-Tech 13 || Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 , 180 14 || (1999). A plaintiff must allege standing to assert a UCL claim, which requires the 15 || party to demonstrate ‘“(1) a loss or deprivation of money or property sufficient to 16 || qualify as injury in fact, 1.e economic injury, and (2) show that the economic injury 17 || was the result of, i.e. caused by, the unfair business practice or false advertising that 18 || is the gravamen of the complaint.” Kwikset Corp. v. Super.Ct., 51 Cal.4th 310 , 322 19 | (2011)(citing Cal. Bus. & Prof. Code § 17204 ). 20 According to Defendant, Plaintiff's claim for violation of the UCL must be 21 || dismissed because she has not sufficiently alleged an unfair business practice and 22 || because she lacks standing to bring the claim. Mot. at 18. Specifically, Defendant 23 || argues that Plaintiff has not stated a valid claim for violation of the HBOR or any 24 || other common law cause of action, therefore the Court must dismiss the derivative 25 || UCL claim. /d. In Defendant’s view, Plaintiff also lacks statutory standing to bring 26 || a UCL claim because she claimed that she lost the opportunity to seek foreclosure 27 || avoidance due to Nationstar’s alleged violations of the HBOR, but a “lost 28 || opportunity” is not the type of economic injury required to bring a claim under the 1 |) UCL. Td. at 19. 2 Plaintiff argues in response that she sufficiently alleged that Defendant 3 || violated section 2923.6 of the HBOR, and that her common law intentional and 4 || negligent misrepresentation claims have merit because Defendant continued the 5 || foreclosure process after Plaintiff submitted a completed application. Oppo. at 19. 6 || Plaintiff claims she has standing to pursue her UCL claim because the allegation that 7 || her home was sold at foreclosure is sufficient to satisfy the economic injury prong of 8 || the standing requirement under the UCL. /d. at 20. She further alleges that 9 || Defendant’s misrepresentations about the status of her application, including the 10 || misrepresentation that she had until April 9, 2019, to resubmit her Profit and Loss 11 || Statement were the cause of her losing her home through a foreclosure sale. Id. 12 As explained above, Plaintiff has sufficiently alleged a violation of the HBOR, 13 || and fraud for purposes of the motion to dismiss, therefore, Defendant’s request for 14 || dismissal based on the derivative nature of the UCL claim is denied. Plaintiff must 15 || also demonstrate economic injury to proceed with a UCL claim. She asserts that the 16 || sale of her home at the foreclosure sale constitutes economic injury for purposes of 17 || the UCL and cites Lueras v. BAC Home Loans Servicing, LP, 221 Cal.App. 4th 49 18 |) (2013), in support. 19 In Lueras, the Court held that plaintiff's allegation that his “home was sold at 20 || a foreclosure sale is sufficient to satisfy the economic injury prong of the standing 21 || requirement.” /d. at 82. However, plaintiff failed to satisfy the causation requirement 22 || there because he did not allege a causal connection between the bank’s “allegedly 23 || unlawful, unfair, or fraudulent conduct and Luera’s economic injury.” Jd. 24 || Defendant contends that Lueras is not applicable to the current case because the bank 25 || explicitly told Lueras that it would not sell the home during the loan modification 26 || review but here Plaintiff cannot identify any explicit statement by Nationstar that it 27 || would stop foreclosure. 28 However, it is immaterial whether the bank explicitly told the homeowner that 1 || 1t would not sell the home in foreclosure during the loan modification process for 2 || purposes of identifying an economic injury to move forward with her UCL claim. 3 || The Lueras Court made clear that, “[s]ale of a home through a foreclosure sale is 4 || certainly a deprivation of property to which a plaintiff has a cognizable claim.” □□□ 5 || at 832. Here, Plaintiff lost her home to foreclosure after Defendant continued with 6 || the foreclosure sale during the pendency of her loan modification review, therefore, 7 || she has alleged an “economic injury” sufficient to satisfy the first prong of the 8 || standing analysis. 9 Just as in Lueras, the reason Plaintiff's home was ripe for foreclosure was due 10 | to her default and that default was not caused by Defendant’s alleged 11 || misrepresentations regarding the status of her loan modification or the date by which 12 || she needed to submit additional documents. See Morgan v. Aurora Loan Services, 13 || LLC, 646 Fed.Appx. 546, 551 (9th Cir. 2016)(“As Morgan's foreclosure resulted 14 || from her defaulting on her loan prior to defendants’ allegedly wrongful acts, she has 15 || not stated a claim under the UCL.’’) Consequently, Defendant’s motion to dismiss is 16 || granted as to Plaintiff's claim for a violation of the UCL. 17 V. CONCLUSION 18 For the foregoing reasons, Defendant’s motion to dismiss is granted in part, 19 || and denied in part. Plaintiff's claims for promissory estoppel and violation of the 20 || UCL are dismissed without prejudice and with leave to amend. 21 IT IS SO ORDERED. [22] 3 Dated: September 29, 2021 [24] Wy James Ln 25 United States District Judge