Yau Class Action - Motion to Dismiss - CA - Fed Court

8/6/2019 Yau Class Action - Motion to Dismiss - CA - Fed Court

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{DN056544;6} 1 CASE NO.SACV11-00006-JVS(RNBXNOTICE OF MOTION AND MOTION DISMISS COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES

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AKERMAN SENTERFITT LLPTODD A. BOOCK (SBN 181933)Email: [email protected] HAYAT (SBN 224458)Email: [email protected]

725 South Figueroa Street, 38th FloorLos Angeles, California 90017-5433Telephone: (213) 688-9500Facsimile: (213) 627-6342

AKERMAN SENTERFITT LLPJUSTIN D. BALSER (SBN 213478)Email: [email protected] E. EDWARDS (SBN 269305)Email: [email protected] Sixteenth Street, Suite 420Denver, Colorado 80202Telephone: (303) 260-7712

Facsimile: (303) 260-7714

Attorneys for DefendantsAURORA LOAN SERVICES LLC andDEUTSCHE BANK TRUST COMPANY AMERICAS, as trustee for ResidentialAccredit Loans, Inc. Mortgage Asset-Backed Pass-Through Certificates, Series 2007-QH9 incorrectly named as DEUTSCHE BANK NATIONAL TRUSTCOMPANY AMERICAS

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION

EDDIE YAU and GLORIA YAU, onbehalf of themselves and all otherssimilarly situated,

Plaintiffs,

v.

DEUTSCHE BANK NATIONAL TRUSTCOMPANY AMERICAS, and AURORALOAN SERVICES LLC, Inclusive,

Defendants.

Case No. SACV11-00006-JVS (RNBx)Assigned to the Hon. James V. Selna

NOTICE OF MOTION ANDMOTION BY DEFENDANTS TODISMISS PLAINTIFFSCOMPLAINT; MEMORANDUM OPOINTS AND AUTHORITIES

Documents Filed Herewith:1. Request for Judicial Notice

2. Proposed Order (Lodged)Hearing Date:Date: February 28, 2011Time: 1:30 p.m.Ctrm.: 10C

Complaint Filed: January 3, 2011Trial Date: None

Case 8:11-cv-00006-JVS -RNB Document 35 Filed 01/25/11 Page 1 of 34 Page ID #:759


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TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD:

PLEASE TAKE NOTICE THAT on February 28, 2011, at 1:30 p.m., or

soon thereafter as counsel may be heard, in Courtroom 10C of the above-entitled Cou

located at 411 West Fourth Street, Santa Ana, California, defendants Aurora Loa

Services LLC (Aurora) and Deutsche Bank Trust Company Americas, as trustee f

Residential Accredit Loans, Inc. Mortgage AssetBacked Pass-through Certificate

Series 2007-QH9, incorrectly named as Deutsche Bank National Trust Compan

Americas (Deutsche Bank), will and hereby do move this Court to dismiss plaintiff

complaint, with prejudice.

This motion is made pursuant to Rule 12(b)(6) of the Federal Rules of CivProcedure, and is based on the ground that plaintiffs fail to state a claim upon whic

relief may be granted and the complaint is barred as a matter of law against Aurora an

Deutsche Bank. Further, Deutsche Bank moves to dismiss plaintiffs' complaint for lac

of standing.

This motion is based upon this notice, the attached memorandum of points an

authorities, and upon all papers and documents on file herein, the Courts fil

concerning this action, together with those facts and documents of which the partie

request judicial notice and/or matters which judicial notice is proper, as well as any or

argument that may be presented at the time of the hearing.

Pursuant to Local Rule 7-3, counsel for defendants discussed the basis of th

motion with plaintiffs counsel via email on January 23, 2011. Counsel for defendan

also provided a copy of its motion to dismiss to plaintiffs' counsel prior to filing i

Plaintiffs' counsel responded that she would "re-title" certain causes of action, to whic

defendants' counsel responded that it was not the title of the claims but the substance

the claims that were subject to dismissal.



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Dated: January 25, 2011 Respectfully submitted,

AKERMAN SENTERFITT LLP

By:/s/ Justin D. BalserJUSTIN D. BALSERTODD A. BOOCKVICTORIA E. EDWARDSIMRAN HAYAT

Attorneys for DefendantsAURORA LOAN SERVICES LLC andDEUTSCHE BANK TRUST COMPANYAMERICAS, as trustee for ResidentialAccredit Loans, Inc. Mortgage Asset-Backed Pass-Through Certificates, Series2007-QH9



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{DN056544;6} i CASE NO.SACV11-00006-JVS(RNBXNOTICE OF MOTION AND MOTION DISMISS COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES

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TABLE OF CONTENTS

I. INTRODUCTION................................................................................................1

II. FACTUAL BACKGROUND ..............................................................................2

III. LEGAL STANDARD ..........................................................................................2

IV. ARGUMENT........................................................................................................3A. Plaintiffs Allegations at Most Relate Solely to Deutsche Bank in Its

Capacity as Trustee for the RALI 2007-QH9 Trust and Even Then, it isnot a Party to Any Agreement Alleged in the Complaint..........................3

B. HOLA Preemption Bars Some Claims Against Aurora ............................5

C. No Breach of the Trial HAMP Agreement (First Cause of Action)..........7

1. The Complaint Does Not Plead the Elements....................................8

2. There is No Private Right of Action Under HAMP...........................9

D. The Yaus Are Not Third Party Beneficiaries (Second Cause of Action) 10

E. No Specific Performance (Third Cause of Action)..................................14F. No Unjust Enrichment (Fourth Cause of Action)....................................15

G. No Unfair Competition Law Claim (Fifth Cause of Action)...................16

H. No Fraudulent Concealment (Sixth Cause of Action) .............................18

I. No Fraudulent Inducement (Seventh Cause of Action)...........................20

J. No Fraud and Deceit (Eighth Cause of Action).......................................21

K. No Declaratory or Injunctive Relief (Ninth Cause of Action).................22

L. No Declaratory Relief (Tenth Cause of Action)......................................23

M. No Constructive Trust (Eleventh Cause of Action).................................23

N. Plaintiffs Failed To Assert Any Basis For Class Treatment or a ClassAction.......................................................................................................23

V. CONCLUSION ..................................................................................................26



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138 Cal.App.4th 1371 (2006) ..................................................................................19

Glass v. United States,258 F.3d 1349 (Fed. Cir. 2001)................................................................................12

Golden West BaseballCo. v. City of Anaheim,25 Cal. App. 4th 11, 31 Cal. Rptr. 2d 378 (Cal. Ct. App. 1994) .............................15

Gomez v. Wachovia Mortgage Corp.,No. 09-2111, 2010 WL 291817 (N.D. Cal. Jan. 15, 2010) ...............................22

Grill v. BAC Home Loans Servicing, L.P.,No. 10-cv-3057, 2011 WL 127891 (E.D. Cal. Jan. 14, 2011)...................................8

Grosz v. Boeing Co.,136 Fed. Appx. 960, 2005 WL 1515070 (9th Cir. 2005) ........................................25

Hammonds v. Aurora LoanServs. LLC,No. EDCV 10-1025, 2010 WL 3859069 (C.D. Cal. Sept. 27, 2010) ................10, 14

Hanon v. Dataproducts Corp.,976 F.2d 497 (9th Cir. 1992)....................................................................................24

Harara v.ConocoPhillips Co.,377 F. Supp. 2d 779, 796 n. 20 (N.D. Cal. 2005)....................................................15

Haskett v. Villas at Desert Falls,90 Cal.Ap.4th 864, , 108 Cal.Rptr.2d 888 (2001).......................................................4

Hernandez v. HomeEq Servicing,No. 1:10cv01484 OWW DLB, 2010 WL 5059673 (E.D. Cal. Dec. 6, 2010)...........9

Hoffman v. Bank of Am.,No. C 10-2171 SI, 2010 WL 2635773 (N.D. Cal. June 30, 2010) ............................2

Ingalsbe v. Bank of Am., N.A.,No 1:10-cv-1665, 2010 WL 5279839 (E.D. Cal. Dec. 13, 2010)..............................9

Jogani v. Superior Court,165 Cal. App. 4th 901 (2008) ..................................................................................15

Kamp v. Aurora Loan Servs. LLC,No. SACV 09-00844, 2009 WL 3177636 (C.D. Cal. Oct. 1, 2009)........................14

Khoury v. Malys of Cal.,14 Cal.App.4th 612 (1993) ......................................................................................17

Klamath Water User Protective Ass'n v. Patterson,204 F.3d 1206 (9th Cir. 2000)..................................................................................11

La Mar v. H&B Novelty & Loan Co.,489 F.2d 461 (9th Cir. 1973).......................................................................................4

Lee v. U.S. Bank, N.A.,No. C 10-1434, 2010 WL 2635777 (N.D.Cal. June 30, 2010)................................18

Levine v. Blue Shield of Cal.,189 Cal. App. 4th 1117 (2010) ................................................................................15

Livid Holdings, Ltd. v. Salomon Smith Barney, Inc.,416 F.3d 940 (9th Cir. 2005)......................................................................................3

Lujan v. Defenders of Wildlife,504 U.S. 555, 112 S.Ct 2130, 119 L.Ed.2d 351 (1992).............................................3

Mabry v. Superior Court,185 Cal.App.4th 208 (2010) ......................................................................................1



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Marketing West, Inc. v. Sanyo Fisher (USA) Corp.,6 Cal. App. 4th 603 (1992) ......................................................................................19

Marks v. Bank of Am., N.A.,No. 3:10-cv-8039, 2010 WL 2572988 (D. Ariz. June 22, 2010).............................13

Marques v. Wells Fargo Home Mortgage, Inc.,

No. 09-cv-1985, 2010 WL 3212131 (S.D. Cal. Aug. 12, 2010)..............................14MB Techs, Inc. v. Oracle Corp.,

No. C 09-5988, 2010 WL 1576686 (N.D. Cal. April 19, 2010)..............................15

Mix v. Sodd,126 Cal. App. 3d 386 (1981)....................................................................................22

Moore v. Kayport Package Express, Inc.,885 F.2d 531 (9th Cir. 1989)....................................................................................19

Mugica v. Aurora Loan Servs. LLC,No. SACV 09-1086, 2009 WL 3467750 (C.D. Cal. Oct. 28, 2009)........................14

Naulty v. GreenPoint Mortg. Funding, Inc.,

No. C 09-1542, 2009 WL 2870620 (N.D.Cal. Sept. 3, 2009) ...................................7Neubronner v. Milken,6 F.3d 666 (9th Cir. 1993)........................................................................................19

Orcilla v. Bank of Am., N.A.,No. C10-3931, 2010 WL 5211507 (N.D. Cal. Dec. 16, 2010)................................14

Orff v. United States,358 F.3d 1137 (9th Cir. 2004)..................................................................................11

Petrie v. Elec. Game Card Inc.,No. SACV 10-00252 DOC (RNBx), 2011 WL 165402 (C.D. Cal. Jan, 12, 2011)...3

Reyes v. Saxon Mortgage Servs. Inc.,No. 09cv1366, 2009 WL 3738177 (S.D. Cal. Nov. 5, 2009) ..................................14

Reyes v. Wells Fargo Bank, N.A.,No. C 10-1667 JCS, 2011 WL 30759 (N.D. Cal. Jan. 3, 2011) ..............................16

Sacks v. Office of Foreign Assets Control,466 F.3d 764 (9

th Cir. 2001).......................................................................................3

SEC v. Prudential Secs., Inc.,136 F.3d 153 (D.C. Cir. 1998) .................................................................................12

Silvas v. E*Trade Mortgage Corp.,514 F.3d 1001 (9th Cir. 2008)..............................................................................6, 18

Smith v. Cent. Ariz. Water Conservation Dist.,418 F.3d 1028 (9th Cir. 2005)..................................................................................11

Spelos v. BAC Home Loans Servicing,L.P.,No. 10-11503, 2010 WL 5174510 (D. Mass. Dec. 14, 2010) .................................14

Sprewell v. Golden State Warriors,266 F.3d 979 (9th Cir. 2001)......................................................................................3

State Farm Bank, FSB v. Reardon,539 F.3d 336 (6th Cir. 2008)......................................................................................5

Vida v. OneWest Bank, F.S.B.,No. 10-987, 2010 WL 5148473 (D. Or. Dec. 13, 2010)..........................................10

Villa v. Wells Fargo Bank, N.A.,



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{DN056544;6} v CASE NO.SACV11-00006-JVS(RNBXNOTICE OF MOTION AND MOTION DISMISS COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES

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2010 WL 935680 (S.D. Cal. March 15, 2010).........................................................14

W. Mining Council v. Watt,643 F.2d 618 (9th Cir. 1981)......................................................................................3

Walker v. Countrywide Home Loans,98 Cal. App. 4th 1158 (2002) ..................................................................................17

Wall Street Network, Ltd. v. New York Times Co.,164 Cal. App. 4th 1171 (2008) ..................................................................................7

Watters v. Wachovia Bank, N.A.,550 U.S. 1, 127 S.Ct. 1559 (2007).............................................................................5

Weiner v. Klais & Co.,108 F.3d 86 (6th Cir. 1997)......................................................................................22

Wells Fargo Bank v. Small,2010 N.Y. Slip Op. 30424(U) 2010 WL 835462 (N.Y. Sup. Ct. Feb. 16, 2010)....14

Wilkerson v. World Sav. & Loan Ass'n,No. S-08-2168, 2009 WL 2777770 (E.D. Cal., Aug. 27, 2009)................................7

Williams v. Geithner,No. 09-1959, 2009 WL 3757380 (D. Minn. Nov. 9, 2009).....................................11

Ziner v. Accuflux Research Inst., Inc.,253 F.3d 1180 (9th Cir. 2001)..................................................................................24

Statutes

12 C.F.R. 559.2............................................................................................................5

12 C.F.R. 559.3(n)(1)...................................................................................................5

12 C.F.R. 560.2............................................................................................................6

12 C.F.R. 560.2(a) .......................................................................................................6

12 C.F.R. 560.2(b)(1)-(13)...........................................................................................612 U.S.C. 1461.............................................................................................................6

12 U.S.C. 1464.............................................................................................................6

12 U.S.C. 5201...........................................................................................................10

12 U.S.C. 5201(2) ......................................................................................................10

Business & Professions Code 17204 .........................................................................17

Business & Professions Code 17200 ..........................................................................16

Civil Code 2224 .........................................................................................................16

Civil Code 2923.5 ........................................................................................................1

Code of Civil Procedure 580d ...................................................................................21

Code of Civil Procedure 726 ...............................................................................17, 18

Rules

Fed. R. Civ. P. 12(b)(6) ..............................................................................................2, 3

Fed. R. Civ. P. 23(a) .....................................................................................................23

Fed. R. Civ. P. 23(b ......................................................................................................24

Fed. R. Civ. P. 9(b) .......................................................................................................19



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{DN056544;6} 1 CASE NO.SACV11-00006-JVS(RNBX

NOTICE OF MOTION AND MOTION DISMISS COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES

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MEMORANDUM OF POINTS AND AUTHORITIES

I. INTRODUCTIONPlaintiffs bring this purported class action lawsuit premised on the Hom

Affordable Modification Program (HAMP). All of their claims are based on HAMP a

the contention they were denied a HAMP modification. However, the overwhelmi

consensus amongst federal courts around the country is no right of action exists f

borrowers under HAMP. All claims should be dismissed no matter who is the plaintif

First and foremost, Deutsche Bank, in relation to the Yaus loan, is merely t

trustee of the RALI 2007-QH9 securitization. Plaintiffs fail to make this criti

distinction between that and Deutsche Bank in its individual corporate capacity. Nclaims can be had against the latter as plaintiffs lack standing to sue the corporate entit

Plaintiffs allege Aurora and Deutsche Bank committed wrongdoing because th

denied plaintiffs a HAMP modification. This is a common fundamen

misunderstanding of how HAMP works. Plaintiffs operate under the incorrect prem

that HAMP, or any alleged violation thereof, provides for a private right of action

does not. Plaintiffs are not intended beneficiaries under the HAMP servicer agreeme

between Aurora and FNMA/Freddie Mac.

Plaintiffs introduce allegations about credit default swaps claiming it be

relationship to the loan owner or servicer being made whole upon a borrowers defau

This allegation is nonsensical. Credit default swaps are not relevant.

This action must also be dismissed because it is not suitable for class treatme

Distinct factual and numerous individualized issues predominate over any of t

common legal issues the potential class claimants share. In the words of Chief Just

Sills of the Fourth District Court of Appeals in Santa Ana, "how in the world would

court certify a class?"1

1See Mabry v. Superior Court, 185 Cal.App.4th 208, 236 (2010). There the Court wpresented with a similar purported "class" and held that a statuteCivil Code2923.5was incapable of class treatment due to the overwhelming individualizecircumstances that class treatment was impractical. The same is true here. Thassumes plaintiffs could even overcome the overwhelming case law throughout th



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For these and other reasons described below, this case should be dismissed w

prejudice.

II. FACTUAL BACKGROUNDOn July 6, 2007, plaintiff Mr. Yau refinanced his prior mortgage loan with

$608,000 loan (Loan) from Homecomings Financial, LLC. (Request for Judicial Not

(RJN), Ex. 1; Compl. 82.) Aurora services the Loan. (Compl. 37, 85.) The Ya

began having financial difficulties in 2008, and sought loss mitigation assistance in 20

and 2009. (Id. 87-95.) On September 24, 2009, Aurora offered Mr. Yau a HAM

trial plan. (Id. Ex. 3.) On March 6, 2010, Mr. Yau was denied a permanent HAMP lo

modification because of excessive forbearance, i.e., at that time Mr. Yaus financsituation was such that Aurora could not create an affordable payment equal to 31%

the Yaus reported monthly gross income without changing the terms [of the Loa

beyond the requirements of the program. (Id. Ex. 5.) As is clear from Exhibit

attached to plaintiffs complaint, the Yaus were never enrolled in the HAMP program

because they did not qualify for HAMP at that time. (Id. 37.)

As of April 7, 2010, the Yaus were $27,291.92 behind on their monthly mortga

payments. (Id. Ex. 6 at 3.) Aurora made further attempts at helping the Yaus avo

foreclosure by offering them a Special Forbearance Agreement. (Id. Ex. 6.) While t

Yaus were making payments under this forbearance agreement, the Yaus re-applied fo

HAMP plan. (Id. 120, 129.) They then brought this suit.

III. LEGAL STANDARDA plaintiffs obligation to provide the grounds of his entitlement to reli

requires more than labels and conclusions, and a formulaic recitation of the elements

a cause of action will not do. Bell Atlantic v. Twombly, 550 U.S. 544, 127 S. Ct. 195

1964-65 (2007). [F]actual allegations must be enough to raise a right to relief abo

the speculative level. Id. at 1965. In considering a motion pursuant to Federal Rules

federal courts that borrowers have no right of action under HAMP. See Hoffman Bank of Am., No. C 10-2171 SI, 2010 WL 2635773, at *5 (N.D. Cal. June 30, 2010).

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Civil Procedure 12(b)(6), a court need not accept as true unreasonable inferences

conclusory legal allegations cast in the form of factual allegations. See Sprewell

Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); W. Mining Council v. Wa

643 F.2d 618, 624 (9th Cir. 1981).

In a recent decision, the Supreme Court reviewed the standard for a pre-answ

motion to dismiss. Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009). The Supreme Court

Iqbal clarified that [i]n order for a complaint to survive a 12(b)(6) motion, it must sta

a claim for relief that is plausible on its face. Petrie v. Elec. Game Card Inc., N

SACV 10-00252 DOC (RNBx), 2011 WL 165402, at *2 (C.D. Cal. Jan, 12, 201

(citing Ashcroft, 129 S.Ct. at 1950). Critically, a complaint must offer more than unadorned, the-defendant-unlawfully-harmed-me accusation. Ashcroft, 129 S.Ct.

1949. [N]aked assertions devoid of further factual enhancement no longer suffice

state a claim. Id. (internal quotation omitted). Dismissal with prejudice is proper if i

clear that the complaint could not be saved by any amendment. Livid Holdings, Ltd

Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005).

IV. ARGUMENTA. Plaintiffs Allegations at Most Relate Solely to Deutsche Bank in Its Capaci

as Trustee for the RALI 2007-QH9 Trust and Even Then, It Is Not a Party

Any Agreement Alleged in the Complaint

Plaintiffs must plead facts showing that they have standing to sue. See Sacks

Office of Foreign Assets Control, 466 F.3d 764, 771 (9th Cir. 2001). To satisfy t

irreducible constitutional minimum of standing, Plaintiffs must establish thr

elements: (1) injury-in-fact; (2) traceability; and (3) redressability. See Lujan

Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct 2130, 119 L.Ed.2d 351 (199

Traceability requires a plaintiff to demonstrate that this injury was caused by t

challenged conduct of the defendant. Id. at 560. In a putative class action, nam

plaintiffs do not acquire standing by virtue of bringing a class action, and the individu

standing of each named plaintiff vis--vis each defendant is a threshold issue. S



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Fallick v. Nationwide Mut. Ins. Co., 162 F.3d 410, 423 (6th Cir.1998). A plaintiff wit

claim against one defendant cannot bring class action against both that defendant and

unrelated group of other defendants (on behalf of those injured by the that defendan

even if the other defendants are engaged in the same conduct as the one defendant. S

La Mar v. H&B Novelty & Loan Co., 489 F.2d 461, 462 (9th Cir. 1973).

At most, plaintiffs only have standing to sue Deutsche Bank in its capacity

trustee for the RALI QH-9 Trust, which owns their loan. Facts sufficient to establ

standing to bring claims against Deutsche Bank in its capacity as trustee for one tru

are insufficient to establish standing to assert claims against Deutsche Bank in

individual capacity or as trustee for other trusts, which are separate legal entities. SCal. Prob. Code, 18001;Haskett v. Villas at Desert Falls, 90 Cal.App.4th 864, 878-

(2001); Easter v. Am. W. Fin., 381 F.3d 948, 963 (9th Cir. 2004). That is, plainti

cannot simply name "Deutsche Bank" and try to tie in other securitizations to th

lawsuit where Deutsche Bank is also trustee. Further, plaintiffs have not alleged h

Deutsche Bank, in its individual or corporate capacity, has wronged them. Even in

capacity as trustee of the trust holding the Yaus Loan, Deutsche Bank is merely t

trustee of a securitization and has no involvement in the servicing of their loa

including any decision about its modification.

Recently, Judge Real, presented with a similar situation in Orellana v. Deutsc

Bank Natl Trust Co., No. 2:09-cv-09367-R-PLA (C.D. Cal. June 6, 2010) dismissed

putative class action complaint finding that the plaintiffs could not assert a traceab

injury to Deutsche Bank. (RJN Ex. 4.) Judge Real ordered that, because the compla

did not meet federal standing requirements, the complaints by other plaintiffs could on

be brought on an individual basis in state court.

A similar complaint was rejected by a federal court in Missouri. See Mayo

GMAC Mortgage LLC, No. 08-00568-CV-W-DGK (W.D. Mo. Mar. 1, 2010) (see R

Ex. 5.) There the Court dismissed a class complaint against Deutsche Bank, except in

capacity as trustee of the specific trust that held the named plaintiffs loan, becau



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plaintiffs could not trace injury or wrongdoing to Deutsche Bank either as the trustee

other, unrelated trusts, or in an individual capacity. The Court in that case held t

"because the Complaint does not allege that DBNTC has any interest in Plaintiffs' lo

in its unaffiliated capacities, Plaintiffs cannot make DBNTC in its unaffiliated capacit

as defendant by characterizing this lawsuit as a putative class action." (Id. p. 7.) As t

complaint is similarly devoid of any pleading of wrongdoing by Deutsche Bank in

individual capacity or in its capacity as trustee for other unidentified, unrelated trus

plaintiffs have not adequately plead standing, and Deutsche Bank should be dismissed

those unaffiliated capacities.

Furthermore, even in its capacity as trustee for the RALI 2007-QH9 trust (orany other capacity), Deutsche Bank is nota party to any of the agreements alleged in t

complaint, as is clear from their face. (Compl. Exs. 1, 2, Servicer Participati

Agreements (SPA).) Nor is Deutsche Bank, in any capacity, party to the HAMP tr

plan or the forbearance agreement that the Yaus mention. (Id. Exs. 3, 6.) Therefo

although most allegations of the complaint are alleged against "defendants," presumab

including Deutsche Bank, to the extent those allegations are founded on obligations

the SPAs, the HAMP trial modification, or the special forbearance agreement to whi

Aurora was a party with the Yaus, Deutsche Bank cannot be held liable.

B. HOLA Preemption Bars Some Claims Against AuroraIn support of their claims for Unlawful/Unfair Acts 17200 (fifth claim) a

Fraud (sixth claim), plaintiffs take issue with the way Aurora services loans, a

contend Aurora failed to make certain disclosures about their Loan and the HAM

program. These claims fail in part because they are preempted. Aurora is a whol

owned direct subsidiary of Aurora Bank FSB (See RJN Exs. 2-3; Compl. 65.) Auro

Bank is a federally chartered bank; Aurora, as its operating subsidiary, enjoys the sam

federal preemption rights. SeeWatters v. Wachovia Bank, N.A., 550 U.S. 1, 127 S.

1559, 1572 (2007), State Farm Bank, FSB v. Reardon, 539 F.3d 336, 345 (6th Cir. 200

(preemption applies to exclusive agents of federal savings association); 12 C.F.R.



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559.2, 559.3(n)(1). As such, the mortgage acquisition and servicing operations

Aurora are subject to a comprehensive scheme of federal regulation: the Home Owne

Loan Act (HOLA), 12 U.S.C. 1461 et seq., and the regulations promulgat

thereunder by the Office of Thrift Supervision (OTS). See 12 C.F.R. 560.2(b)(1)-(13

Congress enacted HOLA in 1933 in order to "restore public confidence

creating a nationwide system of federal savings and loan associations to be centra

regulated according to nationwide 'best practices.'" Fid. Fed. Sav. & Loan Ass'n v. de

Cuesta, 458 U.S. 141, 160-61 (1982). Congress gave OTS "broad authority to iss

regulations governing thrifts." Silvas v. E*Trade Mortgage Corp., 514 F.3d 1001, 10

(9th Cir. 2008) (citing 12 U.S.C. 1464). In 1996, the OTS promulgated 12 C.F.R560.2 to further Congress's goal of achieving a uniform set of regulations governi

federal savings associations. The regulation provides that residential mortgage lendi

and servicing activity conducted by a federal savings association and its subsidiaries a

not subject to state laws, regardless of how they are labeled, that attempt to regula

mortgage lending or servicing. 12 C.F.R. 560.2(a) ("OTS hereby occupies the ent

field of lending regulation for federal savings associations"). "Under HOLA, O

enjoys 'plenary and exclusive authorityto regulate all aspects of the operations

Federal savings associations' and its authority 'occupies the entire field of lendi

regulation for federal savings associations.'" Andrade v. Wachovia Mortg., FSB, No.

CV 0377 JM (WMc), 2009 WL 1111182, at *2 (S.D. Cal. 2009). "The Ninth Circ

agreed, characterizing the enabling statute and subsequent agency regulations as

pervasive as to leave no room for state regulatory control.'" Id. (quoting Conference

Fed. Sav. & Loan Ass'ns v. Stein, 604 F.2d 1256, 1260 (9th Cir. 1979).

Section 560.2(b) lists various categories of state laws preempted by OT

regulations. They include:

(9) Disclosure and advertising, including laws requiring specific statementinformation, or other content to be included in credit application formcredit solicitations, billing statements, credit contracts, or other credit-relatedocuments and laws requiring creditors to supply copies of credit reports borrowers or applicants;



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(10) Processing, origination, servicing, sale or purchase of, or investment participation in, mortgages." [emphasis added]

Here, the Yaus explicitly rely on state laws to claim Aurora should have ma

certain disclosures and serviced their Loan differently. To allow such claims wousubject a federally-regulated entity, Aurora, to state law requirements in dir

contradiction of Congress's intent. Courts have repeatedly held HOLA preempts st

laws that relate to the servicing of a loan or that would mandate a national savin

association (or its subsidiary) to make particular disclosures. See Camacho v. Wachov

Mortg. FSB, No. 09cv1572, 2009 WL 5811698, at *4 (S.D. Cal. Nov. 3, 2009) (UC

claim based on disclosures preempted); see alsoNaulty v. GreenPoint Mortg. Fundi

Inc., No. C 09-1542, 2009 WL 2870620, at *4 (N.D. Cal. Sept. 3, 2009) ("Plaintiffs a

attempting to leverage state law to impose requirements on the way Wachovia manag

its lending operation, including requirements regarding disclosure and advertising, s

id. 560.2(b)(9)");Wilkerson v. World Sav. & Loan Ass'n, No. S-08-2168, 2009 W

2777770, at *3 (E.D. Cal. 2009) ("To the extent plaintiff alleges in his complaint th

defendant was negligent in extending, setting the terms of or servicing his mortga

loan, it appears that such state law claims are preempted[.]").

In this case, Aurora contends part or all of the fifth and sixth causes of action a

preempted. Allegations about disclosures related to the Yaus' modification agreeme

as well as action taken in the servicing of the Loan, are not viable as fraudule

concealment or Unfair Competition Law claims against Aurora.

C. No Breach of the Trial HAMP Agreement (First Cause of Action)The first claim alleges Aurora breached a contract, the trial HAMP agreement,

not completing a final loan modification. This claim must be dismissed because it do

not allege an enforceable agreement ever existed. The elements of breach of contract

(1) the contract, (2) plaintiff's performance or excuse for nonperformance,

defendant's breach, and (4) damage to plaintiffs. E.g., Wall Street Network, Ltd. v. N

York Times Co., 164 Cal. App. 4th 1171, 1178 (2008). In addition, the claim is barr



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because HAMP does not create a private right of action and the allegations of th

complaint are not sufficiently independent of HAMP to allow a private claim.

1. The Complaint Does Not Plead the ElementsThe Yaus have not pled Aurora breached an enforceable agreement based on t

plain words of the contract. As the trial plan itself explains in its very first sentence, "I

am in compliance with this Trial Period Planthen the Lender will provide me with

[HAMP] Agreement, as set forth in Section 3, that would amend the [note a

mortgage]." (Compl. Ex. 3.) Later in the document, the Yaus acknowledged th

understood the trial plan was not a loan modification and that the loan would not

modified "unless and until (i) I meet all of the conditions required for a modificatio(ii) receive a fully executed copy of the Modification Agreement." (Id. Ex. 3, 2(G

The same paragraph includes a further statement that the Yaus understood the servic

Aurora, would not be bound to modify the agreement if they failed any conditi

thereof. (Id. Ex. 3, 2(G).) In addition, the HAMP trial plan explains that "If I comp

with the requirements in Section 2 and my representations in Section 1 continue to

true in all respects the Servicer will send me a Modification Agreement for m

signature which will modify my Loan Documents[.]" (Id. Ex. 3, 3.) Only up

execution of that modification agreement would the loan be modified. (Id. Ex. 3,

The conclusion to be drawn from these provisions is that the trial plan was not

guarantee of a loan modification; rather that a loan modification was to be separate

agreed to and executed.

The Yaus' breach of contract claim is literally identical to an allegation that Jud

Damrell of the Eastern District of California recently dismissed. In Grill v. BAC Ho

Loans Servicing, L.P., No. 10-cv-3057, 2011 WL 127891 (E.D. Cal. Jan. 14, 2011), t

plaintiff sued his servicer for breach of a HAMP trial plan. Because HAMP is a nation

program with national standards, the relevant terms were identical to those in the Ya

trial plan. (Compare id. at *4 with Compl. Ex. 3.) Although the plaintiff in Grill, li

the Yaus here, alleged he qualified for a HAMP modification and had complied with t



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agreement, the Court held he had failed to state a viable claim for breach of contra

Judge Damrell reasoned as follows:

Accordingly, Exhibit C makes clear that providing the requested documents w

simply a part of the application process, which plaintiff was willing to complein the hope that BAC would modify his loan. Under the language of Exhibit C,binding modification would not result unless and until BAC determined thplaintiff complied with the requirements. If BAC so determined, then it wousend plaintiff a modification agreement, including a new monthly paymeamount, which both plaintiff and defendant would execute.

Plaintiff has not alleged or provided exhibits (1) that BAC determined plaintihad met the requirements or (2) that BAC sent plaintiff a loan modification withnew monthly payment that was then executed by both plaintiff and BAC. Asuch, no binding contract has been alleged and BAC's motion to dismiplaintiff's breach of contract claim is GRANTED with leave to amend. Id. at *4

The same conclusion is inescapable here. Aurora and the Yaus never reachedmeeting of the minds as to a final loan modification agreement. While the Yaus alle

they and the Class w[ere] eligible for HAMP (Compl. 78), the clear words of t

HAMP trial plan at Ex. 3 clearly suggest otherwise. On a motion to dismiss, the co

need not accept allegations as true if they are contradicted by documents before t

court.[W]hen a written instrument is attached to the pleading and prope

incorporated therein by reference, the court may examine the exhibit and treat t

pleader's allegations of its legal effect as surplusage. Grill, 2011 WL 127891, at *

Therefore, no contract was breached.

2. There is No Private Right of Action Under HAMPBecause the breach of contract claim is effectively one alleging a breach

HAMP, it cannot go forward because the law is clear that there is no private right

action under HAMP. See, e.g., Ingalsbe v. Bank of Am., N.A., No 1:10-cv-1665, 20

WL 5279839, at *5 (E.D. Cal. Dec. 13, 2010) (collecting cases and stating that t

"consensus among district courts in the Ninth Circuit is that there is no private right

action under HAMP");Hernandez v. HomeEq Servicing, No. 1:10cv01484 OWW DL

2010 WL 5059673, at *2-3 (E.D. Cal. Dec. 6, 2010); Hammonds v. Aurora LoanSer

LLC, No. EDCV 10-1025, 2010 WL 3859069 (C.D. Cal. Sept. 27, 2010). Torres



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Litton Loan Servicing LP, No. 1:10-cv-01709-OWW-SKO, 2011 WL 149833 (E.D. C

Jan. 18, 2011).

Just because a claim purports to be based on common law breach of contract do

not mean it can go forward if the underlying actions involve compliance with HAM

This was the situation presented in Vida v. OneWest Bank, F.S.B., No. 10-987, 2010 W

5148473 (D. Or. Dec. 13, 2010). Like the Yaus, the plaintiff in that case alleged she h

complied with a HAMP trial modification agreement and therefore had an enforceab

promise to modify her loan. The Court disagreed. "The flaw in Vida's logic is that

alleged offer to modify came about and was made wholly under the rubric of HAMP,

were Vida's alleged actions in acceptance Vida fails to state a cause of actiindependent of HAMP, for which there is no private right of action." Id. at *5. He

the Yaus' breach of contract claim is intertwined with the HAMP loan modificati

process. It is has no independent content apart from the HAMP trial period plan. A

result, the reasoning of Vida applies here. The first claim should also be dismiss

because HAMP does not allow for a private right of action.

D. The Yaus Are Not Third Party Beneficiaries (Second Cause of Action)The second cause of action alleges the Yaus (and the putative class) may enfor

two contracts to which they are not parties, specifically contracts related to the fede

HAMP program. This has become a common allegation in complaints by defaulti

home loan borrowers seeking to twist the general desire of the federal government

help qualified borrowers stay in their homes into a mandate for specific modification

Numerous courts, state and federal, have reviewed this issue and concluded that HAM

may not be enforced by borrowers on a third-party beneficiary theory.

On October 3, 2008, Congress enacted the Emergency Economic Stabilization A

of 2008 (EESA), 12 U.S.C. 5201, et seq., which allocated $700 billion to the U

Treasury "to restore liquidity and stability to the financial system." 12 U.S.C. 520

EESA's overall goals included "preserv[ing] homeownership" and "maximiz[ing] over

returns to the taxpayers of the United States." See 12 U.S.C. 5201(2).



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The United States District Court for the District of Minnesota reviewed a

summarized the HAMP program. See Williams v. Geithner, No. 09-1959, 2009 W

3757380 (D. Minn. Nov. 9, 2009). As the Court there noted, the Treasury Guidelin

explain that participating servicers are required to consider all eligible mortgage loa

unless prohibited by the rules of the applicable [pooling and servicing agreement] and

other investor servicing agreements. Id. at *2 Therefore, although an applicant m

meet the threshold criteria, servicers need not modify a loan with a negative NPV or

otherwise prohibited by the investor. Id. at *3.

The original servicer participation agreements between Aurora and Fannie M

do not provide any basis to conclude that borrowers like the Yaus have standing. TYaus base their claim on two SPAs, one dated April 30, 2009, and the other

amendment to the first SPA dated August 24, 2010. First, the April 2009 SPA its

does not identify HAMP-eligible borrowers as intended third-party beneficiaries. (S

Compl. Ex. 1, p. 1 (identifying parties to the SPA)). Nor does the August 20

agreement indicate any intent to benefit third parties. (Id. Ex. 2, p.1.)

Second, there is a presumption that borrowers like the Yaus are inciden

beneficiaries, a presumption they cannot overcome. "Parties that benefit from

government contract are generally assumed to be incidental beneficiaries," rather th

intended ones, and "may not enforce the contract absent a clear intent to the contrary

Klamath Water User Protective Ass'n v. Patterson, 204 F.3d 1206, 1211 (9th Cir. 200

(citing RESTATEMENT (SECOND) CONTRACTS 313(2)). "Government contracts oft

benefit the public, but the individual members of the public are treated as inciden

beneficiaries unless a different intention in manifested." Id. (citation omitted).

The Yaus have not met the difficult burden of showing a "clear intent" here. T

hurdle is not satisfied by a mere recitation of interested constituencies, Klamath, 2

F.3d at 1212, "[v]ague, hortatory pronouncements," id., "statement[s] of purpose," Sm

v. Cent. Ariz. Water Conservation Dist., 418 F.3d 1028, 1037 (9th Cir. 2005), "expli

reference to a third party," Orff v. United States, 358 F.3d 1137, 1145 (9th Cir. 2004),



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even a showing that the contract "operates to the [third party's] benefit and was enter

into with [him] in mind." Id. at 1147. Rather, courts examine the "precise language

the contract for a 'clear intent' to rebut the presumption that the [third parties] are mere

incidental beneficiaries." Id. at 1147 n.5.

There is no doubt that the SPAs attached to the complaint were entered into w

idea that certain qualified borrowers would be able to modify their loans, but nothing

those contracts remotely evidences an intent to grant HAMP applicants the right

enforce them. On the contrary, the only beneficiaries the contracts recognize are "t

parties to the Agreement." (Compl. Ex. 1, 11(E); Ex. 2 11(E).) The Yaus cann

overcome the strong presumption that they are incidental beneficiaries, without standito enforce the contract.

Third, case law analyzing the same and similar SPAs establishes borrowers a

not intended third-party beneficiaries with the right to sue. Courts reach this result

applying federal common law, which governs the construction of the SPA. (Compl. E

1, 11(A).) Federal common law also applies to the question of whether a party is

intended beneficiary of a contract with the federal government. See County of San

Clara v. Astra, USA Inc., 588 F.3d 1237, 1243-44 (9th Cir. 2009); accord Grill, 20

WL 127891, at *5. Under federal law, "before a third party can recover under a contra

it must show that the contract was made for its direct benefit that it is an intend

beneficiary of the contract." Klamath, 204 F.3d at 1210 (emphasis added; citati

omitted); see also Glass v. United States, 258 F.3d 1349, 1354 (Fed. Cir. 2001) (plaint

must "at least show that [the contract] was intended for his directbenefit") (emphasis

original). For a non-party to be deemed an intended beneficiary, the language of

contract must show that "the parties intended to grant [the third party] the right

enforce the Agreement." Escobedo v. Countrywide Home Loans, Inc., No. 09cv155

2009 WL 4981618, at *3 (S.D. Cal Dec. 15, 2009); see also SEC v. Prudential Sec

Inc., 136 F.3d 153, 159 (D.C. Cir. 1998) (third party needed to demonstrate that t



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contracting parties to a consent decree intended to allow the third party to enforce t

terms of the agreement).

The parties to the SPAs in question hereAurora and Fannie Maedid not inte

for borrowers to have standing to enforce the document. The SPAs specifically ident

the contemplated beneficiaries of the agreement, a recitation that does not inclu

borrowers. (See Compl. Ex. 4 11(E) ("The Agreement shall inure to the benefit of

the parties to the Agreement and their permitted successors-in-interest.")).

In ascertaining whether parties to a contract intended to benefit a third par

courts also "ask whether the beneficiary would be reasonable in relying on the promi

as manifesting an intention to confer a right on him or her." Klamath, 204 F.3d at 12(citing RESTATEMENT (SECOND)CONTRACTS 302(1)(b) cmt. d). A borrower would n

be reasonable in relying on the SPA to confer a right on him or her here. The SPA do

not require defendants to modify any particular loans. Instead, like other servicers th

entered into SPAs, Aurora retained considerable discretion over which loans to modi

See, e.g., Williams, 2009 WL 3757380, at *6 (noting that servicers retain "bro

discretion" over the "calculation of the NPV" which drives which loans are modifie

The Yaus could not have reasonably relied on the SPAs to grant the right to a lo

modification; as such, they lack standing to enforce the SPA. See Escobedo, 2009 W

4981618, at *3 ("A qualified borrower would not be reasonable in relying on t

Agreement as manifesting an intention to confer a right on him or her ).

The case law is almost uniform in holding that borrowers cannot sue participati

mortgage servicers on the theory they are intended beneficiaries under the HAM

participation agreements. See Grill, 2011 WL 127891, at *6; Hoffman v. Bank of A

N.A., No. C 10-2171, 2010 WL 2635773, at *3 (N.D. Cal. June 30, 2010) (collecti

cases); Marks v. Bank of Am., N.A., No. 3:10-cv-8039, 2010 WL 2572988, at *4-5 (

Ariz. June 22, 2010); Burtzos v. Countrywide Home Loans, No. 09-cv-2027, 2010 W

2196068, at *2 (S.D.Cal. June 1, 2010);Benito v. Indymac Mortg. Servs., No. 2:09-C

1218-PMP-PAL, 2010 WL 2130648 (D. Nev. May 21, 2010); Escobedo, 2009 W



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4981618 (S.D. Cal Dec. 15, 2009); Mugica v. Aurora Loan Servs. LLC, No. SACV 0

1086, 2009 WL 3467750, at *3 (C.D. Cal. Oct. 28, 2009); Kamp v. Aurora Loan Ser

LLC, No. SACV 09-00844, 2009 WL 3177636, at *4 (C.D. Cal. Oct. 1, 2009) (argume

that borrowers have rights under HAMP participation agreements is "nonsensical a

baseless."). Courts outside the Ninth Circuit have also agreed. See Spelos v. BAC Ho

Loans Servicing, L.P., No. 10-11503, 2010 WL 5174510 (D. Mass. Dec. 14, 201

Wells Fargo Bank v. Small, 2010 N.Y. Slip Op. 30424(U) 2010 WL 835462 (N.Y. Su

Ct. Feb. 16, 2010).

Defendants are only aware of two California cases holding that borrowers do ha

standing to sue as intended beneficiaries: Reyes v. Saxon Mortgage Servs. Inc., N09cv1366, 2009 WL 3738177 (S.D. Cal. Nov. 5, 2009) (Sabraw, J.) and Marques

Wells Fargo Home Mortg., Inc., No. 09-cv-1985, 2010 WL 3212131 (S.D. Cal. Aug.

2010). However, Reyes is not even persuasive to the judge who decided it; earlier th

year, after reviewing the decision in Escobedo, the same judge who had decided Rey

held that borrowers were not third-party beneficiaries under HAMP. See Villa v. We

Fargo Bank, N.A., 2010 WL 935680 (S.D. Cal. March 15, 2010) (Sabraw, J.). And

holding ofMarques was explicitly rejected by the only courts to cite it. See Grill, 20

WL 127891, at *7; Orcilla v. Bank of Am., N.A., No. C10-3931, 2010 WL 5211507,

*3 (N.D. Cal. Dec. 16, 2010); Hammonds v. Aurora Loan Servs. LLC, No. EDCV 1

1025, 2010 WL 3859069, at *2-3 (C.D. Cal. Sept. 27, 2010.)

These cases, from California and other federal courts, and from one state cou

are persuasive, and consistent with principles for determining third-party beneficia

status under federal common law. This Court should follow these decisions and de

the Yaus the right to enforce the SPAs as third-party beneficiaries. Absent an ability

invoke third-party beneficiary status, the second cause of action must also fail.

E. No Specific Performance (Third Cause of Action)By their claim, plaintiffs seek specific performance of the contract which th

annexed as Exhibit 3 to the complaint. The third cause of action should be dismiss



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because it is wholly derivative of the baseless contract claims. Specific performance i

remedy for breach of contract, not a cause of action in itself as this complaint presents

See, e.g., Golden West BaseballCo. v. City of Anaheim, 25 Cal. App. 4th 11, 49, 31 C

Rptr. 2d 378 (Cal. Ct. App. 1994);Harara v.ConocoPhillips Co., 377 F. Supp. 2d 77

796 n. 20 (N.D. Cal. 2005) ("Specific performance is a form of contractual relief, not

independent claim."). This claim should be dismissed.

F. No Unjust Enrichment (Fourth Cause of Action)The Yaus' next theory of recovery is a convoluted claim that "defendants" ha

been unjustly enriched by receiving payments from plaintiffs after the notice of defa

was filed. (Compl. 172(a).) The Yaus raise irrelevant issues. Unjust enrichment is na free-standing cause of action. Even if it were, the reality is, plaintiffs owed money

their mortgage, but have not made all the payments required under the note and deed

trust. (Compl. Ex. 6 at 3.) Thus neither the owner of the Yaus loan (the trust for whi

Deutsche Bank acts as trustee only) nor the servicer (Aurora) has been unjustly enriche

California courts have held that a claim of unjust enrichment should be dismiss

because it is not a cause of action but a general principle underlying various doctrin

and remedies, including quasi-contract.Jogani v. Superior Court,165 Cal.App.4th 90

911 (2008); see Levine v. Blue Shield of Cal., 189 Cal.App.4th 1117, 1138 (201

(affirming superior court that sustained demurrer to unjust enrichment because it is no

cause of action);MB Techs, Inc. v. Oracle Corp., No. C 09-5988, 2010 WL 1576686,

*4 (N.D. Cal. April 19, 2010) (collecting California cases allowing and disallowing

unjust enrichment cause of action and concluding the better view is to dismiss it a

separate cause of action).

Even if the Court reaches the merits of the claim, here it must fail. The Ya

theory of unjust enrichment is that they were induced to make payments under t

HAMP trial modification plan based on a belief that it would lead to a fin

modification. Other courts have rejected the application of unjust enrichment to such

fact scenario. In the recently-decided caseReyes v. Wells Fargo Bank, N.A., No. C 1



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1667 JCS, 2011 WL 30759 (N.D. Cal. Jan. 3, 2011), the plaintiffs alleged they had be

misled into signing a forbearance agreement by the false promise that they would

given an opportunity to save their home. After analyzing the interplay of the unj

enrichment doctrine with the remedy of restitution, the Court held the allegations did n

suffice. Id. at *17-18. The Court concluded that even if plaintiffs had been misled in

making payments they would not otherwise have made, the defendant had not be

enriched unjustly because the plaintiffs owed that money under the note and deed

trust. Id. at *18 (citing Cal. Civil Code 2224). In this case, Aurora had a right

servicer to receive the Yaus' payment on behalf of the trust. The HAMP trial payme

did notbring the loan current under the original loan documents; therefore, defendanhave not only not been unjustly enriched, they have not even received the benefit of t

original bargain.

To the extent the Yaus contend unjust enrichment was in the form of mon

received from the federal government for participation in HAMP, such a claim of unju

enrichment is not viable. Because there is no right to sue recipients of TARP funds

HAMP participants, an unjust enrichment cause of action based on such involvement

improper. See Aleem v. Bank of Am., N.A., No. EDCV 09-1812 VAP, 2010 W

532330, at *3 (C.D. Cal. Feb. 9, 2010) (dismissing unjust enrichment cause of acti

premised on receipt of TARP funds because no private right of action exists under th

law). The fourth cause of action should be dismissed.

G. No Unfair Competition Law Claim (Fifth Cause of Action)The complaint next contends defendants have violated Cal. Bus. & Prof. Code

17200, et seq. (the Unfair Competition Law or UCL), which makes actionable a

"unlawful, unfair or fraudulent business practice." In proscribing any "unlawf

business practice, Section 17200 borrows violations of other laws and treats them

unlawful practices that are actionable as unfair competition. See Cel-Tech Comm.

L.A. Cellular Tel. Co., 20 Cal.4th 163, 180 (1999). Facts supporting a Section 172

claim must be pled with reasonable particularity. See Khoury v. Malys of Cal.,



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Cal.App.4th 612, 619 (1993); accord Benham v. Aurora Loan Serv., No. C-09-205

2009 WL 2880232, at *4 (N.D. Cal. 2009) (applying reasonable particularity standard

UCL claim in federal court). A plaintiff must have suffered personal injury-in-fact a

lost money or property as a result of the illegal act. See Bus. & Prof. Code, 17204.

California's unfair competition statutes establish three forms of unf

competition: (1) unlawful, (2) unfair, or (3) deceptive or fraudulent. See Cel-Te

Comm. 20 Cal.4th at 180. A business practice is unlawful if it is forbidden by law

Walker v. Countrywide Home Loans, 98 Cal.App.4th 1158, 1169 (2002). A busin

practice is unfair within the meaning of the UCL if it violates established public poli

or if it is immoral, unethical, oppressive, or unscrupulous and causes injury to consumthat outweigh its benefits. See id. at 1170. To show a business practice is deceptive

plaintiff must show members of the public are likely to be deceived. See id. at 1170.

The cut-and-paste allegations of this UCL claim fail to state any basis for reli

Plaintiffs allege "defendants"without distinguishing between Aurora and Deutsc

Bankhave a pattern and practice of (a) applying payment to late charges and fees

violation of HAMP, (b) "padding the loan" with unnecessary charges, (c) demandi

post default payments while "keeping them in foreclosure", (d) refusing to provi

permanent loan modifications to borrowers in HAMP plans whose loans were cover

by CDS or insurance, (e) refusing to give HAMP modifications to borrowers who we

not in default, (f) breaching contracts, (g) sending false letters about special forbearan

agreements, (h) falsely representing that the HAMP program may allow borrowers

modify their loans, (i) violating the "Security First Rule" ofCode of Civil Procedure

726, and (j) violating laws related to foreclosure prevention, deficiency judgments, a

the rights of contracting parties. (Compl. 180). There are, for all practical purpos

no allegations of fact in the complaint related to any of these claims. Certainly, there

none related to the Yaus. The complaint does not identify what payments we

misapplied, nor what rule of HAMP such an application violated. It does not expl

what fees were padded, nor why Aurora could not accept payments under the HAM



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trial plan without dismissing the foreclosure. The fact is many borrowers have modif

loans, with Aurora, through HAMP, as is a matter of public record. (RJN Ex. 6

Plaintiffs do not offer any factual allegations to support their contention that Aurora

Deutsche Bank) systematically violates HAMP provisions. This falls short of t

Twombly/Iqbal pleading standard, and far short of the "reasonable particularity" standa

applicable to UCL claims.

The complaint tries to give a veneer of legal specificity to some of its allegatio

by citing Code of Civil Procedure 726 and California's anti-deficiency laws. (Com

180(j)-(k).) Section 726 is an election-of-remedies statute, which provides tha

creditor must foreclose a security interest before bringing an action against the obligora secured debt, and that by suing without foreclosing, the creditor elects a remedy oth

than foreclosure. See id.; In re Madigan, 122 B.R. 103, 105 (B.A.P. 9th Cir. 199

Here, neither Aurora nor Deutsche Bank has sued the Yaus. The law simply does n

apply. The contention that deficiency judgments are unavailable is true but irrelevant.

Finally, to the extent the UCL claim is based on Aurora's obligation to ta

particular actions in servicing the loan, or its failure to disclose certain facts, it

preempted. See Section IV(A), supra, of this memorandum. It is well-settled that UC

claims are preempted by HOLA when applying the UCL would function as a state l

regulation on a national savings association's mortgage lending or servicing activiti

E.g., Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1004 (9th Cir. 2008); Lee v. U

Bank, N.A., No. C 10-1434, 2010 WL 2635777, at *8-9 (N.D. Cal. June 30, 2010).

The fifth cause of action should be dismissed.

H. No Fraudulent Concealment (Sixth Cause of Action)The sixth cause of action contends defendants fraudulently concealed mater

facts. This allegation is both ill-conceived as to the elements and improperly vag

2 This report is prepared and published by the federal Making Home Affordabprogram. It can be found at http://www.makinghomeaffordable.gov, and is subject

judicial notice as a document from a government agency website.



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Under California law, the elements of common law fraud are "misrepresentatio

knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damage

Gil v. Bank of Am., Nat'l Ass'n, 138 Cal.App.4th 1371, 1381 (2006). Fraudul

concealment is substantially the same as fraudulent misrepresentation except it involv

the non-disclosure of pertinent information, rather than an affirmative misrepresentatio

See Marketing West, Inc. v. Sanyo Fisher (USA) Corp., 6 Cal.App.4th 603, 612 (1992)

To properly allege fraud, a plaintiff must state facts in support with particulari

The pertinent rule reads, "[i]n alleging fraud or mistake, a party must state w

particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). T

particularity requirement of Rule 9(b) is designed to "give defendants notice of tparticular misconduct which is alleged to constitute the fraud charged so that they c

defend against the charge and not just deny that they have done anything wron

Neubronner v. Milken, 6 F.3d 666, 671 (9th Cir. 1993). To be sufficient, a plaint

should allege the time, place and manner of the alleged fraudulent activities. See Moo

v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989); see also Cooper

Pickett, 137 F.3d 616, 627 (9th Cir. 1997) (fraud allegations should include the "wh

what, where, when and how"). Generally, the complaint must attribute particu

fraudulent statements or acts to individual defendants. See Moore, 885 F.2d at 54

Where, as here, the plaintiff alleges only corporate fraud, the plaintiff "should inclu

the misrepresentations themselves with particularity and, where possible, the roles of t

individual defendants in the misrepresentations." Id. at 540.

The sixth claim alleges Aurora and Deutsche Bank concealed that Deutsche Ba

was the owner of the loan, that the loans were covered by CDS and that some loa

would fail the NPV test due to CDS and insurance. (Compl. 186(l)-(n).) This do

not state a claim for relief because one can only fraudulently conceal a fact when he

under an obligation to disclose it. See Marketing West, Inc., 6 Cal. App. 4th at 6

Here there was no such obligation. Indeed the allegation is frivolous because the deed

trust itself explains the loan may be sold without notice to plaintiffs. (RJN Ex. 1 20).



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The complaint does not identify any obligation by each defendant to disclose

the Yaus that Deutsche Bank owned the loan. In fact, it claims a trust did. Even i

could identify one, it does not provide any explanation about how the failure to ident

Deutsche Bank caused the Yaus to take any action to their detriment. Similarly,

Yaus cannot show defendants had to disclose that the loan were "covered" by CDS, n

how the NPV test would be calculated for any given loan.

These allegations also ignore the essential elements of a fraud claim. The Ya

have not shown how they relied to their detriment on any concealment of facts. Af

defaulting on loan payments, all the Yaus did was sign a HAMP trial plan through whi

they made payments to Aurora on the Loan. As discussed above, the Yaus were alreaobligated to make those payments, so they suffered no legally cognizable harm

making payments on the Loan.

Finally, this claim is preempted against Aurora under HOLA because Californ

state law cannot mandate that Aurora make any particular disclosures about a loan. T

Truth-in-Lending Act would also serve to preempt any state law claims requiri

additional loan disclosures to borrowers. See 15 U.S.C. 1610.

Fraudulent concealment claims on this theory must be dismissed as preempted.

I. No Fraudulent Inducement (Seventh Cause of Action)The seventh cause of action, although labeled a fraud claim, is in substan

another claim for breach of the HAMP contract. The Yaus claim they we

fraudulently-induced to enter into the HAMP trial plan, and then the April 2010 spec

forbearance agreement, by a false promise that it would lead to a permane

modification. (Compl. 201-204.) The words of the HAMP agreement and spec

forbearance agreement contradict any such allegation.

The Yaus argue that to be entitled to a modification, they simply had to make t

payments as required. (Id. 204.) As discussed in section IV(C)(1), the HAM

agreement is crystal clear that it does not guarantee a loan modification to any borrow

(See Compl. Ex. 3.) The HAMP agreement also requires that documentation abou



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borrower's finances be provided; simply making plan payments is not the on

requirement to progress to a final modification. (Seeid.)

Plaintiffs' claim of fraudulent inducement is even more misguided when o

considers the terms of the April 2010 special forbearance agreement. That docum

explicitly states, "At the expiration date, a portion of the Arrearage will still

outstanding. Because payment of the Plan payments will not cure the Arreara

Customer's account will remain delinquent. Upon the Expiration Date, Customer m

cure the Arrearage through a full reinstatement, payment in full, loan modificati

agreement, or other loan workout option[.]" (Compl. Ex. 6, attachment A, B.) Failu

to cure the arrearage, the document warned, could lead to foreclosure. (Id.) Given theexplicit warnings that no modification was assured, the Yaus cannot claim th

reasonably relied on a promise to modify their loans in either the HAMP trial plan

special forbearance agreement.

In addition, for the reasons explained in sections IV(C)(2), supra, to allow this s

called "fraud" claim, which is really a breach of contract allegation, in connection w

the HAMP trial plan would effectively allow a private right of action under that la

One cannot create a style breach of HAMP agreement claim as common law allegatio

See Vida, 2010 WL 5148473, at *5. The seventh cause of action should be dismissed.

J. No Fraud and Deceit (Eighth Cause of Action)The eighth cause of action claims Aurora and Deutsche Bank fraudulently induc

the Yaus to make payments after the foreclosure process had begun. (Compl. 213.)

conflates two different concepts, and it certainly fails to state a viable fraud cause

action. The complaint does not specify why it believes the Yaus did not have to ma

any payments after the notice of default was filed. It appears, based on the reference

anti-deficiency law, (see id. 180), the Yaus believe that if they had responded to t

notice of default by never paying another penny on the loan, there is nothing Deutsc

Bank or Aurora could do to compel them. That is true enough, as the anti-deficien

statute, Code of Civil Procedure 580d, would prohibit a first-lien creditor fro



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obtaining an enforceable judgment for the mortgage debt against the Yaus. This is n

the same however as extinguishing the obligation. The Yaus still owe the money,

least in theory. California courts have recognized that a moral debt may persist. It ev

has a legal effect in the context of quiet title actions, as that form of equitable relief h

been denied to debtors even when the underlying debt was no longer enforceable. S

Mix v. Sodd, 126 Cal. App. 3d 386, 390 (1981).

Therefore, it is simply wrong for the Yaus to claim they had no "continui

obligation" to pay under the loan after foreclosure began. See Reyes v. Wells Far

Bank, N.A., 2011 WL 30759, at *18. Because the money they paid was owed, this cla

also fails for reasons similar to the other fraud claims, the absence of reasonable reliancausing legally-cognizable damages. Similarly, it fails to allege any actu

misrepresentations, since Aurora never promised, in either the HAMP trial plan

special forbearance agreement, that mere payment of the plan payments would lead to

loan modification. The eighth cause of action should be dismissed.

K. No Declaratory or Injunctive Relief (Ninth Cause of Action)The ninth cause of action is an absurd claim that defendants cannot foreclose as

Gloria Yau. declaratory relief is not an independent claim; rather, it is a form of reli

See Gomez v. Wachovia Mortg. Corp.,No. 09-2111, 2010 WL 291817, at *2 (N.

Cal. 2010) (citingWeiner v. Klais & Co., 108 F.3d 86, 92 (6th Cir. 1997). A plaint

is entitled to declaratory relief only after he or she establishes an actual claim. S

Avirez Ltd. v. Resolution Trust Co., 876 F. Supp. 1125, 1143 (C.D. Cal. 1995). T

cause of action also fails because injunctive relief is not an independent cause

action. See Bellomi v. Countrywide Fin. Corp., No. 09-cv-3431, 2009 W

3680500, at *2 (N.D. Cal. Oct. 30, 2009).

The other problem with the ninth cause of action is that it is substantively wron

Here, both Eddie Yau and Gloria Yau were trustors on the deed of trust and are therefo

bound by its terms. (RJN Ex. 1.) It is immaterial that Gloria Yau did not sign the no

There has been a default on the obligation underlying the security instrument she sign