Free Motion to Dismiss - District Court of California - California

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Rachel M. Dollar, CSB 199977 SMITH DOLLAR PC Attorneys at Law 404 Mendocino Avenue, Second Floor Santa Rosa, California 95401 Telephone: (707) 522-1100 Facsimile: (707) 522-1101 Email: [email protected] Attorneys for Defendant Aurora Loan Services, LLC, erroneously sued as Aurora Loan Services, a Lehman Brothers Company UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA ­ SAN FRANCISCO DIVISION SCOTT K. ZIMMERMAN, JUDY A. ZIMMERMAN, Plaintiffs, v. AURORA LOAN SERVICES, A LEHMAN BROTHERS COMPANY, a business entity; DIABLO FUNDING GROUP INCORPORATED, a California corporation; FIRST AMERICAN LOANSTAR, a business entity form unknown; AND ALL PERSONS UNKNOWN CLAIMING ANY LEGAL OR EQUITABLE RIGHT, TITLE, ESTATE, LIEN OR INTEREST IN THE PROPERTY DESCRIBED IN THE COMPLAINT ADVERSE TO PLAINTIFFS' TITLE OR ANY CLOUD ON PLAINTIFFS' TITLE THERETO, and Does 1 through 50, inclusive, Defendants. CASE NO.: C 08-3731 MHP NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT AND TO STRIKE PUNITIVE DAMAGES; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF KATHY JARBOE IN SUPPORT THEREOF; PROPOSED ORDER [FRCP 12(B) (6) AND (F)] Judge: Marilyn H. Patel Date: October 6, 2008 Time: 2:00 p.m. Dept: 15, 18th Floor Action Filed: July 21, 2008

TO EACH PARTY AND TO COUNSEL OF RECORD FOR EACH PARTY: YOU ARE HEREBY NOTIFIED THAT on October 6, 2008 at 2:00 p.m., in Department 15 of this Court, located at 450 Golden Gate Avenue, 18th Floor, San Francisco, CA, Defendant Aurora Loan Services, LLC, ("Aurora") will move the Court to dismiss Plaintiffs' Complaint and/or to strike Plaintiffs' request for punitive damages therein. The Motion is made and based upon Federal Rules of Civil Procedure 12(b) (6) and (f) on the grounds that Plaintiffs' Complaint (the -1Notice of Motion and Motion to Dismiss and to Strike Punitive Damage Claim

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"Complaint") fails to state a claim against Aurora and/or one or more of these claims is barred as a matter of law, and the request for punitive damages should be stricken. The motion will be based on this Notice, the attached Memorandum of Points and Authorities, the Declaration of Cathy Jarboe and upon all pleadings, papers and documents on file herein, as well as any oral argument which my be presented at the time of hearing or any matters of which judicial notice is requested and/or has been taken previously in this case. Dated: August 26, 2008 SMITH DOLLAR PC

By

/S/ Rachel M. Dollar Attorneys for Defendant Aurora Loan Services, LLC, erroneously sued as Aurora Loan Services, a Lehman Brothers Company

-2Notice of Motion and Motion to Dismiss and to Strike Punitive Damage Claim

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Rachel M. Dollar, CSB 199977 SMITH DOLLAR PC Attorneys at Law 404 Mendocino Avenue, Second Floor Santa Rosa, California 95401 Telephone: (707) 522-1100 Facsimile: (707) 522-1101 Email: [email protected] Attorneys for Defendant Aurora Loan Services, LLC, erroneously sued as Aurora Loan Services, a Lehman Brothers Company UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA ­ SAN FRANCISCO DIVISION SCOTT K. ZIMMERMAN, JUDY A. ZIMMERMAN, Plaintiffs, v. AURORA LOAN SERVICES, A LEHMAN BROTHERS COMPANY, a business entity; DIABLO FUNDING GROUP INCORPORATED, a California corporation; FIRST AMERICAN LOANSTAR, a business entity form unknown; AND ALL PERSONS UNKNOWN CLAIMING ANY LEGAL OR EQUITABLE RIGHT, TITLE, ESTATE, LIEN OR INTEREST IN THE PROPERTY DESCRIBED IN THE COMPLAINT ADVERSE TO PLAINTIFFS' TITLE OR ANY CLOUD ON PLAINTIFFS' TITLE THERETO, and Does 1 through 50, inclusive, Defendants. CASE NO.: C 08-3731 MHP MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS COMPLAINT AND TO STRIKE PUNITIVE DAMAGES CLAIM [FRCP 12(B)(6) AND (F)] Judge: Marilyn H. Patel Date: October 6, 2008 Time: 2:00 p.m. Dept: 15, 18th Floor Action Filed: July 21, 2008

-iMemorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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TABLE OF CONTENTS INTRODUCTION..........................................................................................................1 SUMMARY OF ARGUMENT ......................................................................................1 A. UNDERLYING FACTS .....................................................................................2 B. RELEVANT PROCEDURAL HISTORY...........................................................2 ARGUMENT .................................................................................................................2 A. STANDARD ON MOTION TO DISMISS .........................................................2 B. JUDY ZIMMERMAN LACKS STANDING TO PROSECUTE THE COMPLAINT: SHE WAS NOT A BORROWER ON THE SUBJECT LOAN NOR A PARTY TO THE REPAYMENT AGREEMENTS. ................................................................................................3 C. PLAINTIFFS' FIRST CAUSE OF ACTION TO SET ASIDE THE TRUSTEE'S SALE AND SECOND CAUSE OF ACTION TO CANCEL THE TRUSTEE'S DEED FAIL AS A MATTER OF LAW...................................................................................................................4 1. PLAINTIFF HAS NOT PLED SUFFICIENT PROCEDURAL IRREGULARITY TO OVERCOME THE PRESUMPTION OF REGULARITY OF THE TRUSTEE'S SALE. .....................................................................................................4 2. THE TENDER RULE BARS PLAINTIFFS' CHALLENGE TO THE TRUSTEE'S SALE ..................................................................5 D. PLAINTIFFS' THIRD CAUSE OF ACTION FOR QUIET TITLE MUST FAIL BECAUSE PLAINTIFFS CANNOT DEMONSTRATE THAT PLAINTIFFS HAVE SUPERIOR TITLE IN THE PROPERTY TO AURORA. ...............................................................................6 E. PLAINTIFFS' FOURTH CAUSE OF ACTION FOR AN ACCOUNTING MUST FAIL.............................................................................7 F. PLAINTIFF'S FIFTH AND SIXTH CAUSES OF ACTION FOR BREACH OF CONTRACT AND BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING MUST FAIL BECAUSE THE PAROL EVIDENCE RULE BARS INTRODUCTION OF THE ALLEGED ORAL AGREEMENT. ....................................................................8 G. PLAINTIFFS FIFTH AND SIXTH CAUSES OF ACTION FOR BREACH OF CONTRACT AND BEACH OF DUTY OF GOOD FAITH AND FAIR DEALING MUST FAIL BECAUSE THE STATUTE OF FRAUDS BARS PLAINTIFFS' INTRODUCTION OF THE ALLEGED ORAL AGREEMENT. ....................................................10 H. PLAINTIFFS' SEVENTH CAUSE OF ACTION FOR NEGLIGENCE MUST FAIL BECAUSE PLAINTIFFS HAVE NOT PLED THE NECESSARY ELEMENTS...........................................................11 I. PLAINTIFFS' EIGHTH CLAIM FOR INTENTIONAL MISREPRESENTATION FAILS BECAUSE THE ALLEGATIONS LACK SPECIFICITY. ......................................................................................12 J. PLAINTIFFS' NINTH CLAIM FOR NEGLIGENT MISREPRESENTATION MUST FAIL............................................................13

- ii Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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PLAINTIFFS' TENTH CAUSE OF ACTION FOR BREACH OF FIDUCIARY DUTY MUST FAIL: PLAINTIFFS' CONCLUSORY STATEMENT THAT A FIDUCIARY DUTY EXISTED IS INSUFFICIENT TO PLEAD THE EXISTENCE OF A FIDUCIARY RELATIONSHIP..............................................................................................13 L. PLAINTIFFS' ELEVENTH CLAIM FOR IMPOSITION OF CONSTRUCTIVE TRUST MUST FAIL..........................................................14 M. PLAINTIFFS' TWELFTH CAUSE OF ACTION FOR SPECIFIC PERFORMANCE MUST FAIL........................................................................14 N. PLAINTIFFS' THIRTEENTH CAUSE OF ACTION FOR DECLARATORY RELIEF MUST FAIL. ........................................................15 O. PLAINTIFFS' FOURTEENTH CAUSE OF ACTION FOR VIOLATION OF TRUTH IN LENDING ACT AND OTHER FEDERAL LENDING STATUTES MUST FAIL.............................................15 1. PLAINTIFFS' DAMAGES CLAIM UNDER TILA MUST FAIL BECAUSE AURORA WAS NOT THE CREDITOR IN THE TRANSACTION. .........................................................................16 2. PLAINTIFFS' CLAIM UNDER HOEPA MUST FAIL.........................16 3. PLAINTIFFS' CLAIM UNDER RESPA MUST FAIL BECAUSE IT IS TIME-BARRED ........................................................17 4. PLAINTIFFS' CLAIMS UNDER TILA, HOEPA AND RESPA MUST FAIL BECAUSE THE THREE-YEAR STATUTES OF REPOSE HAVE EXTINGUISHED ANY REMAINING RIGHTS UNDER THE STATUTES. .............................17 P. PLAINTIFFS' CLAIM FOR RELIEF UNDER BUSINESS AND PROFESSIONS CODE § 17200 MUST FAIL BECAUSE PLAINTIFFS CANNOT ESTABLISH THE BORROWED CLAIM.................18 Q. PLAINTIFFS' SIXTEENTH AND SEVENTEENTH CAUSES OF ACTION FOR INTENTIONAL AND NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS MUST FAIL BECAUSE PLAINTIFFS HAVE NOT PLED ANY VIABLE DUTY OWED BY AURORA. ........................................................................................................21 1. PLAINTIFFS' CLAIM FOR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS FAILS BECAUSE PLAINTIFFS DO NOT PLEAD THAT AURORA'S CONDUCT WAS EXTREME OR OUTRAGEOUS. ............................22 2. PLAINTIFFS HAVE NOT PLED THAT AURORA OWED ANY DUTY, THUS THE CLAIM FOR NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS MUST ALSO FAIL. ....................................................................................................22 R. THE PRAYER FOR PUNITIVE DAMAGES SHOULD BE STRICKEN FROM THE COMPLAINT...........................................................23 S. THE ENTIRE COMPLAINT FAILS BECAUSE PLAINTIFFS' CLAIMS ARE UNCERTAIN AND THE CLAIMS CONFLICT WITH THE DOCUMENTS ATTACHED AS EXHIBITS AND WITH OTHER DOCUMENTS CENTRAL TO PLAINTIFFS' CLAIMS...........................................................................................................23 CONCLUSION ............................................................................................................24 - iii -

K.

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TABLE OF AUTHORITIES CASES 6 Angels, Inc. v. Stuart-Wright Mortgage, Inc., 85 Cal.App.4th 1279, 1284 (2001)....................5 ACH v. Finkelstein, 264 Cal.App.2d 667, 674 (1968) .............................................................14 Admiral Oil Co. v. Lynch, 188 Cal.App.2d 269, 272 (1961)....................................................17 Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990) ..........................................3 Banco Do Brasil, S.A. v Latian, Inc., 234 Cal.App.3d 973, 1002 (1991)..................................11 Barrier Specialty Roofing & Coatings, Inc. v. ICI Paints North America, Inc., 2008 WL 272876, *5(E.D.Cal.2008)(slip copy) .........................................................................15 Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007) ..................................................3 BFP v. Resolution Trust Corp., 511 U.S. 531, 544 (1994) ...................................................5, 18 Bloom v. Martin, 865 F.Supp. 1377, 1386-87 (N.D.Cal. 1994) aff'd, 77 F.3d 318 (9th Cir. 1996)..........................................................................................................................21 Brown v. Busch, 152 Cal.App.2d 200, 204 (1957) ....................................................................5 Campbell v. Superior Court, 2 Cal.App.4th 904, 920 (2005) ....................................................16 City of Hope Nat. Med. Center v. Genetech, Inc., 43 Cal.4th 375, 398 (2008)..........................28 Collester v. Oftedahl, 48 Cal.App.2d 756, 760 (1941) ...............................................................5 Communist Party v. Valencia, Inc., 35 Cal.App.4th 980 (1995)................................................16 Crummer v. Whitehead, 230 Cal.App.2d 264, 268 (1964) .........................................................6 Donald v. Café Royal, 218 Cal.App.3d 168, 184 (1990)..........................................................18 During v. First Boston Corp. 815 F.2d 1265, 1267 (9th Cir. 1987) .............................................3 EPA Real Estate Partnership v. Kang,12 Cal.App.4th 171, 175 (1992)....................................11 Fidelity Federal Savings and Loan Assoc. v. de la Cuesta, (1982) 458 U.S. 141......................23 Gaffney v. Downey Sav. & Loan, 200 Cal.App.3d 1154, 1165 (1988) ..............................18, 28 Gray v. First Century Bank, 549 F.Supp.2d 815 (E.D. Tenn. 2008) ...........................................3 Haigler v. Donnelly, 18 Cal.2d 674, 680 (1941); Robinson Helicopter Co. v. Dana Corp. (2003) 105 Cal.App.4th 779, 772-73.........................................................................27 Hatch v. Collins, 225 Cal.App.3d 1104, 1113 (1990) .................................................. 6, 7, 8, 17 Henehan v. Hart, 117 Cal.App. 386, 390 (1900)......................................................................12 In re Community Bank of Northern Virginia, 467 F.Supp.2d 466, 480 (W.D. Pa. 2006).................................................................................................................................21 In re Luciano, 200 Fed.Appx. 628 (9th Cir., 2006) ...................................................................20 Johnson v. First Federal Bank of Cal., 2008 WL 682497 (N.D. Cal., Mar. 10, 2008)...........4, 20 Karlsen v. American Sav. & Loan Assn., 15 Cal.App.3d 112, 117 (1971) .............................6, 7 Keeler v. Murphy, 117. CalApp.386, 390 (1931).....................................................................12 Kennedy v. Bank of America, 237 Cal.App.2d 637, 650 (1965) ..............................................17 Kritzer v. Lancaster, 96 Cal.App.2d 1, 6-7 (1950) .....................................................................9 Larsen v. Cal. Fed. Bank, 76 F.3d 387 (9th Cir. 1996)..............................................................18 - iv Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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Leonard v. Bank of America Nat. Trust & Sav. Ass'n,16 Cal.App.2d 341, 344 (1936) .................................................................................................................................6 Lewis v. Superior Court, 30 Cal.App.4th 1850, 1866 (1994) .....................................................8 Marksman Partners, L.P. v. Chantal Pharmaceuticals Corp., 927 F.Supp. 1297 (C.D.Cal. 1996).................................................................................................................14 McHenry v. Renne, 84 F.3d 1172, 1174 (9th Cir. 1997) ...........................................................28 Miller & Starr, California Real Estate (3d ed.)...........................................................................7 Nymark v. Heart Fed. Sav. & Loan Ass'n, 231 Cal.App.3d 1089, 1096 (1991) .................13, 16 Palacin v. Allstate Ins. Co., 119 Cal,App.4th 855, 734-35 (2004) .............................................12 Riganti v. McElhinney, 248 Cal.App.2d 116, 125 (1697) ..........................................................8 Rottman v. Hevener, 54 Cal.App. 474, 478 (1921) ..................................................................10 Shimpones v. Stickney, 219 Cal. 637, 649 (1934) .....................................................................8 Silvas v. E*Trade Mortgage Corp., (S.D.Ca. 2006) 421 F.Supp.2d 1315..................... 22, 24, 25 Sparrow v. Interbay Funding, LLC, 2006 WL 284252 (D.D.C. 2006) (slip copy) ....................20 Spreewell v. Golden State Warriors, 266 F.3d 979, 980 (9th Cir. 2001)................................3, 29 Staff v. Meridien North America Beverly Hills, LLC, 506 F.3 832 (9th Cir., 2007)....................4 Stansfield v. Starkey, 220 Cal.App.3d 59, 73 (1990) .........................................................14, 15 Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 109 (1998) ...................................4 Stevens v. Ocwen Federal Bank, FSB, 2007 WL 1601484, *1 (D.Utah 2007) .........................19 Stevens v. Plumas Eureka Annex Min. Co., 2 Cal.2d 493, 497 (1953).......................................5 Tarmann v. State Farm Mutual Automobile Insurance Company 2 Cal.App.4th 153, 157 (1991).........................................................................................................................15 Tekle v. U.S., 511 F.3d 839, 855 (9th Cir. 2007) ......................................................................26 Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002) .........................29 Wanetik v. Mel's of Modesto, 811 F.Supp 1402, 1408-09 (N.D.Cal. 1992) .............................27 Warren v. Merrill, 143 Cal.App. 4th 96, 113-114 (2006)............................................................8 Webb v. Chase Manhattan Mortg. Corp., 2007 WL 709335 (S.D.Ohio, March 5, 2007) (slip copy) ...............................................................................................................26 Weiss v. Washington Mut. Bank, (2007) 147 Cal.App.4th 72...................................................24 Western Mining Council v. Watt, 643 F.2d 628, 624 (9th Cir. 1981).....................................3, 7 STATUTES 12 C.F.R. § 226.2 (17) ............................................................................................................19 12 C.F.R. § 560.2(a)................................................................................................................23 12 C.F.R. § 560.2(b) .........................................................................................................23, 24 12 C.F.R. §226.32(a)(1)(i).......................................................................................................20 12 U.S.C. § 2614...............................................................................................................20, 21 12 U.S.C. §§ 2601 et seq.........................................................................................................19 15 U. S.C. § 1641(a) ...............................................................................................................19 -vMemorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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15 U.S.C. § 1641(f).................................................................................................................19 15 U.S.C. §§ 1601 et seq.........................................................................................................18 15 U.S.C. §§ 1602 et seq.........................................................................................................18 15 U.S.C. §§ 1637 & 1635(f) ....................................................................................................4 15 U.S.C. §§ 1641(e) ..............................................................................................................19 15 U.S.C. §1602(aa)(1)(B) ......................................................................................................20 Cal. Civ. Code § 1698(b) ........................................................................................................12 Cal. Civil Code § 1006..............................................................................................................4 Cal. Civil Code § 1698............................................................................................................12 Cal. Civil Code § 3294............................................................................................................27 Code Civ. Proc. § 1060 ...........................................................................................................18 Code. Civ. Proc. § 1856(a) ......................................................................................................10 OTHER AUTHORITIES 4 Witkin, California Procedure, Pleadings, § 537 (4th ed.) p. 62...............................................11 5 Witkin, California Procedure, Pleadings, § 741, at 199 (4th ed. 1997) ...................................14 Deeds of Trust, § 10:212, pp. 653-54 ........................................................................................5

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Defendant Aurora Loan Services, LLC ("Aurora") respectfully submits the following points and authorities in support of its Motion to Dismiss the Complaint and to Strike the Punitive Damages Claim: I. INTRODUCTION Plaintiffs' Complaint is fatally vague and uncertain in its entirety and asserts no legitimate claim for relief against Aurora. Plaintiffs' claims have no merit and can never be amended to state a claim for relief against Aurora. The simple fact is that Plaintiff Scott Zimmerman took out a loan secured by his residence and did not make the payments on the loan. Mr. Zimmerman failed to comply with the terms of multiple forbearance agreements and thus Aurora foreclosed on the underlying security. II. SUMMARY OF ARGUMENT Plaintiffs commenced this action in an effort to overturn the foreclosure sale of their residence. Judy Zimmerman lacks standing to pursue any claims against Aurora because she was not a co-owner of the property and she signed none of the loan documents or the repayment agreements at issue in this case. All claims of Judy Zimmerman must be dismissed. Plaintiffs' claims in equity must fail because Plaintiffs have made no effort to tender sums due under the foreclosed Deed of Trust. Plaintiffs' contract claims fail because Plaintiffs have not pled sufficient facts to escape the bar of the parol evidence rule or the statute of frauds. Plaintiffs' fraud claims based upon the alleged breach of the oral agreement fail both because the oral agreement has not been properly pled and because the fraud claims have not been alleged with any particularity as required by Federal Rule of Civil Procedure ("FRCP") 9. Plaintiffs claim that statutes were violated and name the Trust in Lending Act ("TILA"), Home Ownership Equity Protection Act ("HOEPA"), and the Real Estate Settlement Procedures Act ("RESPA") (together, the "federal lending statutes"), but fail to state how or why any statute is implicated and what Aurora did or did not do that caused the violation. Plaintiffs' claim for restitution under Business and Professions §17200 ("§17200") based upon the alleged violations of the federal lending statutes also fails because the requisite underlying statutory violation has not been pled. The §17200 claim also fails because it is uncertain; nothing in the Complaint indicates -1Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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what provisions of the federal lending statutes were violated and how §17200 is applicable. Furthermore, the §17200 claim is preempted by federal law and Plaintiffs cannot use §17200 to regulate Aurora's activities in this case. Plaintiffs' tort claims for negligence, breach of fiduciary duty and emotional distress have no merit because Aurora owed no duty of care to Plaintiffs and Plaintiffs have failed to allege the facts necessary to allege that any fiduciary duty arose. Finally, Plaintiffs fail to state a sufficient basis for an award of punitive damages. As such, if Plaintiffs' Complaint is not dismissed in its entirety, the claims for punitive damages should be stricken from the Complaint. A. Underlying Facts Plaintiff Scott Zimmerman refinanced his home in December of 2004 (Complaint "Compl." ¶ 1) by taking out a first loan in the amount of $448,000 and a second for $112,000. (Compl. ¶ 9). Scott Zimmerman alone executed the loan documents. (Compl. ¶¶ 9, 10). Plaintiff missed several payments in 2007 and because of the delinquency, Aurora commenced non-judicial foreclosure against the property. (Compl. ¶ 12). Plaintiff contacted Aurora in December of 2007 to request hardship assistance. (Compl. ¶ 13). Plaintiff Scott Zimmerman executed and returned a written repayment agreement to Aurora on January 31, 2008 along with his payment under the written agreement. (Compl. ¶ 16). The Complaint further alleges that, in March or April, Plaintiff learned that the property had been foreclosed and that a trustee's deed had been issued naming Aurora as the owner of the property. (Compl. ¶ 17). B. Relevant Procedural History Plaintiffs filed their Complaint in the Superior Court of Contra Costa County on July 21, 2008. Aurora became aware of the filing and filed a Notice of Removal with this Court and the state court on August 5, 2008. There have been no other filings in this case and no discovery has yet commenced. None of the other defendants have appeared. III. ARGUMENT A. Standard on Motion To Dismiss Federal Rule of Civil Procedure 12(b)(6) provides that a dismissal is proper where the -2Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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complaint fails to state either a "cognizable legal theory" or "sufficient facts alleged under a cognizable legal theory." Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). In reviewing the Complaint, the Court need not accept as true unwarranted deductions, unreasonable inferences, conclusory allegations or legal characterizations. Spreewell v. Golden State Warriors, 266 F.3d 979, 980 (9th Cir. 2001); see also Western Mining Council v. Watt, 643 F.2d 628, 624 (9th Cir. 1981). The Complaint must set forth sufficient factual allegations to raise the right to relief above the speculative level. Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). The Court may disregard allegations in a complaint that are contradicted by facts established in documents exhibited to or referenced in the complaint. During v. First Boston Corp. 815 F.2d 1265, 1267 (9th Cir. 1987). In this case, there is no law to support the claims Plaintiffs have made; the facts alleged are insufficient to state a claim and contradict relevant documents in issue; and there are several insurmountable bars on the face of the Complaint. See, Gray v. First Century Bank, 549 F.Supp.2d 815 (E.D. Tenn. 2008). The Complaint should be dismissed in its entirety. B. Judy Zimmerman Lacks Standing to Prosecute the Complaint: She was not a Borrower on the Subject Loan nor a Party to the Repayment Agreements. In order to establish standing, a plaintiff must show that (1) she suffered an injury in fact; (2) she can trace the injury to the conduct of the defendant; and (3) the court can redress her with a favorable decision. Staff v. Meridien North America Beverly Hills, LLC, 506 F.3 832 (9th Cir., 2007). If a party lacks standing, the court does not have jurisdiction as to that party. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 109 (1998). Here, the Complaint states that Scott and Judy Zimmerman are the equitable owners of the property known as 4042 Meadows Lane, Oakley, California. (Compl. ¶ 1). All claims in the Complaint flow from alleged TILA, HOEPA and RESPA violations which occurred at the loan's inception, as well as from the alleged oral agreement between Plaintiff Scott Zimmerman and Aurora. TILA, as amended by HOEPA applies to "consumers" defined to be "the party to whom credit is offered or extended." 15 U.S.C. §§ 1637 & 1635(f). Scott Zimmerman is the only "consumer" under TILA and HOEPA. Although Plaintiffs have not cited a particular section of -3Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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RESPA which applies in this case, the various sections deal with "applicants" and "borrowers." The Complaint does not allege that Judy Zimmerman was an applicant and she did not borrow any funds from the original creditor. (Jarboe Decl. Exhibits C, D, E). In addition, Plaintiff Scott Zimmerman alleges he and Aurora entered the repayment agreements Scott Zimmerman's signature is the only signature affixed to the written repayment agreement. (Coml. ¶ 16) Judy Zimmerman now occupies the property, however, title conferred by occupancy is not a sufficient interest in real property to enable the occupant or the occupant's privies to commence or maintain an action to quiet title. Cal. Civ. Code § 1006. "In the Ninth Circuit, where a complaint on its face reveals that the plaintiff lacks standing, a motion to dismiss for failure to state a claim under Rule 12(b)(6) is proper." Johnson v. First Federal Bank of Cal., 2008 WL 682497 (N.D. Cal., Mar. 10, 2008) (slip copy) (dismissing allegations in the complaint against a lender by a nonborrowing spouse). The Complaint reveals that Judy Zimmerman lacks the capacity to maintain this action and all claims of Judy Zimmerman should be dismissed. C. Plaintiffs' First Cause of Action to Set Aside the Trustee's Sale and Second Cause of Action to Cancel the Trustee's Deed Fail as a Matter of Law. A fundamental principal of law in equitable proceedings is that one who seeks equity should do equity with respect to the dispute before any relief is awarded. Collester v. Oftedahl, 48 Cal.App.2d 756, 760 (1941). Here, Plaintiffs offer no equity, but request that equitable principles be invoked to place them back into ownership of the property, free of any liens, and without the responsibility to tender anything due to Aurora. (Compl. ¶ 30,32; prayer for relief, ¶ 3). Plaintiffs have pled no facts entitling them to assert claims in equity and the Complaint should be dismissed. 1. Plaintiff has not Pled Sufficient Procedural Irregularity to Overcome the Presumption of Regularity of the Trustee's Sale.

The United States Supreme Court has held that the foreclosure statutes adopted by the various states should not be displaced by the federal courts, otherwise "every piece of realty purchased at a foreclosure" could be challenged and title would be clouded in contravention of the policies underlying non-judicial foreclosure sales. BFP v. Resolution Trust Corp., 511 U.S. 531, 544 (1994). A non-judicial foreclosure is accompanied by a common law presumption that it "was conducted regularly and fairly." Brown v. Busch, 152 Cal.App.2d 200, 204 (1957); see also -4Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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Stevens v. Plumas Eureka Annex Min. Co., 2 Cal.2d 493, 497 (1953). The presumption can only be rebutted by substantial evidence of prejudicial procedural irregularity. 6 Angels, Inc. v. StuartWright Mortgage, Inc., 85 Cal.App.4th 1279, 1284 (2001). It is the burden of the party challenging the trustee's sale to prove such irregularity and thereby overcome the presumption of the sale's regularity. Hatch v. Collins, 225 Cal.App.3d 1104, 1113 (1990). Here, Plaintiffs merely make a bare assertion that the executed, written forbearance agreement which included a statement that there were no oral modifications was ineffective, and that an oral forbearance agreement with contradictory terms should control. (Compl. at ¶16). The bare allegation of the existence of an oral forbearance agreement alone is not the "substantial evidence of procedural irregularity" required to overcome the presumption of regularity of the sale. Because Plaintiffs failed to plead the necessary substantial evidence of procedural irregularity, the first and second causes of action must fail. 2. The Tender Rule Bars Plaintiffs' Challenge to the Trustee's Sale.

An action to set aside a trustee's sale must be accompanied by an offer to pay the full amount of the debt for which the property was security. Karlsen v. American Sav. & Loan Assn., 15 Cal.App.3d 112, 117 (1971); Crummer v. Whitehead, 230 Cal.App.2d 264, 268 (1964). This rule is premised upon the equitable maxim that a court of equity will not order that a useless act be performed. "Equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idly and expensively futile act, nor will it purposely speculate in a field where there has been no proof as to what beneficial purpose may be subserved through its intervention." Leonard v. Bank of America Nat. Trust & Sav. Ass'n,16 Cal.App.2d 341, 344 (1936). Plaintiffs have not pled that the entire amount of the debt has been tendered. A cause of action claiming an irregular foreclosure sale fails unless the trustor can allege and establish a valid tender. Karlsen, supra, 15 Cal.App.3d at 121. "Without an allegation of such tender in the complaint that attacks the validity of the sale, the complaint does not state a cause of action." Miller & Starr, California Real Estate (3d ed.), Deeds of Trust, § 10:212, pp. 653-54. Here, Plaintiffs merely offer to tender the delinquent amounts due under the foreclosed deed -5Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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of trust. (Compl. ¶ 23). Plaintiffs also make a conditional offer to tender other sums once their claim for an Accounting is granted by this Court. Id. Plaintiffs' conditional offer to tender is

ineffective as a matter of law. See Gaffney v. Downey Savings & Loan Assn., 200 Cal.App.3d 1154, 1167 (1988) (holding that the deposit of disputed loan payments in a bank account controlled by the borrower's attorney was not an unconditional tender of amounts due under the deed of trust). As a result, the first and second causes of action must fail. D. Plaintiffs' Third Cause of Action for Quiet Title Must Fail Because Plaintiffs Cannot Demonstrate that Plaintiffs have Superior Title in the Property to Aurora. The California Code of Civil Procedure sets forth the elements of a cause of action for quiet title as follows: The complaint shall be verified and shall include all of the following: (a) A description of the property that is the subject of the action. ... In the case of real property, the description shall include both its legal description and its street address or common designation, if any; (b) The title of the plaintiff as to which a determination under this chapter is sought and the basis of the title. ...; (c) The adverse claims to the title of the plaintiff against which a determination is sought; (d) The date as of which the determination is sought. If the determination is sought as of a date other than the date the complaint is filed, the complaint shall include a statement of the reasons why a determination as of that date is sought; (e) A prayer for the determination of the title of the plaintiff against the adverse claims. Cal. Civ.Proc. § 761.020. In order to successfully plead a cause of action for quiet title in California, a plaintiff must also allege that his title is superior to that of the defendant. Gerhard v. Stephens, 68 Cal.2d 864, 918 (1968). In this case, however, the allegations in the Complaint establish that Aurora's interest in the property is superior to Plaintiffs'. For example, ¶ 102 of the Complaint acknowledges that Aurora is currently in possession of title to the property and that Aurora has refused "to return title of the subject property to plaintiffs." Further, Plaintiffs acknowledge that notices of sale were posted and published (as required under the non-judicial foreclosure statutes) and that Aurora is the record legal owner of the property. (Compl. ¶ 22). Plaintiffs clearly acknowledge that Aurora's title is superior to Plaintiffs' (Compl. ¶ 54), and as a result, their claim for quiet title fails on that basis. Plaintiffs state in the Complaint that they are the equitable owners of the property. (Compl. ¶ 1). The holder or claimant of an equitable interest in title cannot maintain an action for quiet -6Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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title against the legal owner. Lewis v. Superior Court, 30 Cal.App.4th 1850, 1866 (1994); Riganti v. McElhinney, 248 Cal.App.2d 116, 125 (1697). The exception is where the party holding legal title has obtained that title by fraud. Warren v. Merrill, 143 Cal.App. 4th 96, 113-114 (2006). Plaintiffs have not alleged that Aurora acquired title to the property by fraud ­ Plaintiffs claim that the fraud occurred in the making of the oral agreement, which was outside the foreclosure process, therefore, the fraud exception does not apply. It is settled law in California that a mortgagor cannot quiet his title against the mortgagee without paying the debt secured. Shimpones v. Stickney, 219 Cal. 637, 649 (1934). Plaintiffs merely claim they have tendered or offer to tender the amount necessary to cure the default under the foreclosed deed of trust once such amounts are determined pursuant to an accounting. (Compl. ¶ 23). This offer is insufficient, as the law requires that the entire amount owed be tendered. Shimpones, supra, 219 Cal. at 649. Plaintiffs' third claim for quiet title must fail because Plaintiffs have not pled their superior title to the property and because they have not tendered the entire amount of the debt. E. Plaintiffs' Fourth Cause of Action for an Accounting Must Fail. In order to properly state a cause of action for an accounting, the plaintiff is required to allege the following: (1) a fiduciary relationship or other circumstances appropriate to the remedy; and (2) a balance due from the defendant to the plaintiff that can only be ascertained by an accounting; and (3) misconduct. Kritzer v. Lancaster, 96 Cal.App.2d 1, 6-7 (1950). Plaintiffs have pled no facts to support their claim that there was fiduciary relationship between themselves and Aurora, as servicer of Plaintiffs' loan, because a loan servicer owes no fiduciary duty to borrowers. Marks v. Ocwen Loan Servicing, LLC, 2008 WL 344210, at *6 (N.D.Cal. Feb. 6, 2008).

Plaintiffs do not allege that there is currently any amount due to them from Aurora. Plaintiffs also fail to allege any other circumstances in which the equitable remedy of an accounting might be appropriate. Thus, the fourth cause of action for accounting must fail. /// /// /// -7Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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F.

Plaintiff's Fifth and Sixth Causes of Action for Breach of Contract and Breach of Covenant of Good Faith and Fair Dealing Must Fail Because the Parol Evidence Rule Bars Introduction of the Alleged Oral Agreement. The original contract between the original lender and Plaintiff Scott Zimmerman was the

promissory note and the deed of trust at issue in this case. Any forbearance, whether oral or written, would have served to modify the obligations of the parties created by the note and deed of trust. The oral agreement Plaintiffs claim arose on January 28, 2008, if it ever did exist, was modified and superseded by the written repayment agreement executed by Plaintiff Scott Zimmerman on January 31, 2008. (Compl. ¶ 16). The written repayment agreement contained the following integration clause: 13. The entire agreement. This agreement sets forth all of the promises, covenants, agreements, conditions and understandings between the parties hereto with respect to the subject matter hereof. This agreement supersedes all prior understandings, inducements or conditions express or implied, oral or written with respect thereto except as contained or referred to herein. This agreement may not be amended, waived, discharged or terminated orally, but only by an instrument in writing. Id. The purpose of an integration clause is to preclude the introduction of evidence which varies or contradicts the terms of the written instruments. Code of Civ. Proc. § 1856(a). Plaintiffs are barred from introducing the oral forbearance agreement which contradicts the written repayment agreement executed by Plaintiff Scott Zimmerman just three days later because: a written contract supersedes all preceding or accompanying oral negotiations or stipulations. . . The rule that a writing which purports to be the complete contract of the parties is deemed in law to be the full repository of the agreement or contract, that the whole contract is expressed by it, and that evidence of oral stipulations is not admissible to incorporate other elements in it or to alter or enlarge its terms, is applicable to negotiable as well as to nonnegotiable instruments. Rottman v. Hevener, 54 Cal.App. 474, 478 (1921) Plaintiff Scott Zimmerman acknowledges that he did sign the written repayment agreement but claims he failed to read the document. (Compl. ¶ 16). Plaintiff, who is a licensed California attorney (and is representing himself and Judy Zimmerman in this case), asks this Court to disregard his signature on a repayment agreement with the terms that contradict those in the alleged -8Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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oral forbearance agreement in every material manner. Plaintiffs have not pled facts to overcome the parol evidence rule's bar to the oral agreement. The parol evidence rule in California: prohibits the introduction of extrinsic evidence -oral or written-to vary or contradict the terms of an integrated written instruments. [Citations omitted]. According to this substantive rule of law, when the parties intend a written agreement to be the final and complete expression of their understanding, that writing becomes the final contract between the parties, which may not be contradicted by even the most persuasive evidence of collateral agreements. Such evidence is legally irrelevant."[Citation omitted.] EPA Real Estate Partnership v. Kang,12 Cal.App.4th 171, 175 (1992). The California Court of Appeal has defined a four-part test to determine whether the parol evidence rule bars the consideration of an oral agreement: (1) Does the written agreement appear to be complete on its face, or is there an integration clause? (2) Does the alleged oral agreement or proposed interpretation directly contradict the written instrument? (3) Would the oral agreement naturally have been included in the written instrument? And (4) Would evidence of the oral agreement be likely to mislead the trier of fact? Banco Do Brasil, S.A. v Latian, Inc., 234 Cal.App.3d 973, 1002 (1991). An affirmative answer to any one of these questions bars

consideration of the offered parol evidence. Id. Here, the written agreement contains an integration clause and the oral agreement contradicts the written agreement in every material aspect, thus it cannot survive the bar of the parol evidence rule. Plaintiffs allege that the terms of the oral forbearance agreement are these: 1. Aurora would withdraw the Notice of Default filed against the property and cease foreclosure activities; 2. Plaintiff Scott Zimmerman would pay Aurora $4,500 per month for three months; and 3. Aurora would consider refinancing Plaintiff's loan (Compl. ¶ 36) The terms of the oral forbearance directly contradict the integrated written repayment agreement, which has the following terms: 1. Foreclosure notices would not be withdrawn and the foreclosure proceedings would resume without need of additional notices to Plaintiffs. (Jarboe Decl. Exhibit A, ¶ 7). 2. Plaintiff Scott Zimmerman would pay the sum of $4,153.33 per month for January, February and March, and a final payment of $27,332.52 was due in April of 2008. (Jarboe Decl. -9Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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Exhibit A, p.1). 3. There is no mention of refinancing the loan at the end of three months.(Jarboe Decl. Exhibit A). At the motion to dismiss stage, the moving party must conclusively establish that the language in the writing unambiguously negates beyond reasonable controversy the construction alleged in the Complaint. Palacin v. Allstate Ins. Co., 119 Cal,App.4th 855, 734-35 (2004). The language in the writing must be "so clear that parol evidence would be inadmissible to refute it." Id. at 735. Every single material term of the oral agreement is contradicted by the written

repayment agreement and as a result, there is no doubt that the parol evidence rule bars introduction of the oral contract in this case. The claim for breach of contract and the dependant claim for breach of the duty of good faith and fair dealing must fail. G. Plaintiffs Fifth and Sixth Causes of Action for Breach of Contract and Beach of Duty of Good Faith and Fair Dealing Must Fail Because The Statute of Frauds Bars Plaintiffs' Introduction of the Alleged Oral Agreement. Plaintiffs have pled that the oral forbearance agreement came into existence on January 28, 2008, and controlled the contractual relationship between Plaintiffs and Aurora. The statute of frauds with respect to modification of written contracts, Cal. Civil Code § 1698, provides: (a) A contract in writing may be modified by a contract in writing. (b) A contract in writing may be modified by an oral agreement to the extent that the oral agreement is executed by the parties. (c) Unless the contract otherwise expressly provides, a contract in writing may be modified by an oral agreement supported by new consideration . . . Performance by one party alone is not sufficient to satisfy the "execution" requirement stated in Cal. Civ. Code § 1698(b). "The cases are clear under this section that an oral agreement is not executed within the meaning of the Code unless it has been fully performed by both parties." Keeler v. Murphy, 117. CalApp.386, 390 (1931); see also Henehan v. Hart, 117 Cal.App. 386, 390 (1900). Plaintiffs have affirmatively pled that Aurora did not execute the oral agreement because, as Plaintiffs note, the foreclosure sale was completed (Compl. ¶ 21). Plaintiffs have not pled that any new consideration was given under the oral agreement so that the statute of frauds is met under §1698(c). Instead, Plaintiffs' allegations support the fact that - 10 Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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the written repayment agreement was intended to, and did represent the understanding of the parties because on the same date that Plaintiff Scott Zimmerman executed and returned the written repayment agreement to Aurora, he also transmitted a payment to Aurora, consistent with the terms of the written repayment agreement (Jarboe Decl., Exhibit A, ¶ a.1) (Compl. ¶ 15). H. Plaintiffs' Seventh Cause of Action for Negligence Must Fail Because Plaintiffs Have not Pled the Necessary Elements To state a claim for negligence, a plaintiff must plead: (1) that defendant owed a legal duty of care to plaintiff; (2) defendant breached that duty; (3) injury to plaintiff as a result of the breach; and (4) damage to plaintiff. 4 Witkin, California Procedure, Pleadings, § 537 (4th ed.) p. 624. Plaintiffs have pled that Aurora's duty was "to exercise reasonable care and skill. . . integrity, honesty and loyalty." (Compl. ¶ 48). As a general rule, a financial institution owes a borrower no duty of care. Nymark v. Heart Fed. Sav. & Loan Ass'n, 231 Cal.App.3d 1089, 1096 (1991). Plaintiffs pled that Aurora's breach of its duty occurred when Aurora "failed to disclose to Plaintiffs that it did not withdraw the Notice of Default as agreed and that it was going forward with the trustee's sale." (Compl. ¶ 48). Plaintiffs are incorrect, however, because Aurora did disclose that the foreclosure process would resume without further notice in the event the written repayment agreement was breached. (Jarboe Decl., Exhibit A, ¶ 5, 7). Plaintiff Scott Zimmerman admits that he eventually read the written repayment agreement that he executed and returned to Aurora, and that he understood that the terms of the written agreement were different from the terms of the oral agreement Plaintiff claims was negotiated. Id. Plaintiff Scott Zimmerman was notified that the Notice of Default would not be withdrawn and that the foreclosure would commence from the point at which it was stopped. As a result, Plaintiffs have failed to plead that Aurora breached any duty to Plaintiffs. Plaintiffs further fail to allege that Aurora's breach, by not notifying Plaintiffs that the notices would not be withdrawn, was the actual or proximate cause of their damages. The

foreclosure sale went forward because Plaintiffs paid only the first payment due under the written repayment agreement. Plaintiffs claim that further payments were excused, (Compl. ¶ 37) but fail - 11 Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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to state why this may be the case. It was not the case and the foreclosure sale went forward due to non-payment by the Plaintiffs. Notification that the foreclosure notice was not withdrawn was not the actual or proximate cause of Plaintiffs' claimed damages; the proximate cause of their damages was their own failure to make payments under the written repayment agreement. Plaintiffs have failed to plead the necessary elements to state a cause of action for negligence and as a result, Plaintiffs' seventh claim for negligence must fail. I. Plaintiffs' Eighth Claim for Intentional Misrepresentation Fails Because the Allegations Lack Specificity. The elements for intentional misrepresentation are: (1) a false representation of a material fact; (2) defendants' knowledge of the falsity; (3) intent to induce another into relying on the representation; (4) actual reliance on the representation; and (5) resulting damage. Finkelstein, 264 Cal.App.2d 667, 674 (1968). ACH v.

Additionally, the fraud claim must be pled

specifically and every element of the fraud must be clearly alleged. Stansfield v. Starkey, 220 Cal.App.3d 59, 73 (1990). The allegations must go not only to the time, place and content of the alleged misrepresentations, but also the circumstances of the false statements. Marksman Partners, L.P. v. Chantal Pharmaceuticals Corp., 927 F.Supp. 1297 (C.D.Cal. 1996). The particularity

requirement for fraud mandates that a plaintiff "show how, when, where, to whom, and by what means the representations were tendered." Stansfield v. Starkey, supra, 220 Cal.App.3d at 73. Plaintiffs allege that Scott Zimmerman called Aurora and spoke with an unnamed representative sometime on or about January 28, 2008, during which conversation, the terms of the oral forbearance agreement were negotiated. (Compl. ¶ 14). Plaintiffs set forth no specific information in the Complaint, and the fraud claims fail on this basis alone. When asserting fraud against a corporation, a plaintiff must also specifically allege the names of the persons, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. See Tarmann v. State Farm Mutual Automobile Insurance Company 2 Cal.App.4th 153, 157 (1991). Plaintiffs make no averments concerning the person they claim to

have orally modified their repayment agreement, what authority this person had to bind Aurora and when exactly this conversation took place. - 12 Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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The fraud claims necessarily fail because they were not pled with specificity and because Plaintiff does not allege that Aurora's employees were authorized to make misrepresentations such as those alleged in the Complaint. Id. at 157. J. Plaintiffs' Ninth Claim for Negligent Misrepresentation Must Fail. The elements of a claim for negligent misrepresentation are (1) a misrepresentation of a past or existing fact, (2) without reasonable grounds for believing it to be true, (3) intent to induce another's reliance in the facts misrepresented, (4) ignorance of the truth and justifiable reliance by the party at whom the misrepresentation was directed, and (5) damages. Barrier Specialty Roofing & Coatings, Inc. v. ICI Paints North America, Inc., 2008 WL 272876, *5(E.D.Cal.2008)(slip copy). The oral agreement has not been properly pled to avoid the bars of the parol evidence rule and the statute of frauds. Even if the existence of an oral agreement survives these bars, it was superseded by the written repayment agreement that bears Plaintiff's signature. Plaintiffs were aware of the fact that the alleged oral contract and the written repayment agreement contained different terms before the foreclosure sale ever took place, thus Plaintiffs cannot be said to have justifiably relied on any representations in the oral agreement and their damages do not flow from the alleged misrepresentation. Plaintiffs have not pled a cause of action for negligent

misrepresentation and Plaintiffs' ninth claim should be dismissed. K. Plaintiffs' Tenth Cause of Action for Breach of Fiduciary Duty Must Fail: Plaintiffs' Conclusory Statement that a Fiduciary Duty Existed is Insufficient to Plead the Existence of a Fiduciary Relationship Plaintiffs conclude that Aurora owed Plaintiffs a fiduciary duty as the servicer of their loan. Plaintiffs fail to allege how a fiduciary relationship might have arisen between themselves and Aurora, as their loan servicer. A financial institution generally owes borrowers no duty. Nymark, supra, 231 Cal.App.3d at 1096. Plaintiffs' tenth cause of action for breach of fiduciary duty must fail because Plaintiffs have not pled any facts that a fiduciary duty arose between themselves and Aurora as their loan servicer. /// /// - 13 Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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L.

Plaintiffs' Eleventh Claim for Imposition of Constructive Trust Must Fail. A Constructive Trust is not a cause of action, but is an equitable remedy imposed to prevent

unjust enrichment and arises when one party holding property has an equitable duty to convey it to another. Campbell v. Superior Court, 2 Cal.App.4th 904, 920 (2005). [A] constructive trust may only be imposed where the following three conditions are satisfied: (1) the existence of a res (property or some interest in property); (2) the right of a complaining party to that res; and (3) some wrongful acquisition or detention of the res by another party who is not entitled to it. [Citations.]" Communist Party v. Valencia, Inc., 35 Cal.App.4th 980 (1995). Plaintiffs' eleventh cause of action for the imposition of a constructive trust should be dismissed because it is not a recognized cause of action in California. Flores v. Emerich & Fike, 2008 WL 2489900, *39 (E.D. Cal., June 18, 2008)(slip copy). Plaintiffs' have not pled that they tendered the amounts due under the deed of trust or that Aurora, by legitimately foreclosing on the security for Plaintiffs' defaulted loan, wrongfully acquired Plaintiffs' property. Plaintiffs have failed to plead a cause of action for constructive trust, thus the eleventh claim must fail. M. Plaintiffs' Twelfth Cause of Action for Specific Performance Must Fail. The elements of a claim for specific performance are: (1) The making of a specifically enforceable type of contract that is sufficiently certain in its terms; (2) Adequate consideration; (3) Plaintiffs' performance, tender, or excuse of non-performance; (4). Defendant's breach; (5)

Inadequacy of the remedy at law. 5 Witkin, California Procedure, Pleadings, § 741, at 199 (4th ed. 1997). Plaintiffs' allegations are insufficient to state a claim for specific performance because Plaintiffs have not pled sufficient facts to lift the oral contract out of the statute of frauds. Kennedy v. Bank of America, 237 Cal.App.2d 637, 650 (1965) (upholding the trial court's order sustaining demurrer to plaintiff's cause of action because plaintiff failed to plead facts which overcome the statute of frauds.). Similarly, Plaintiffs have not sufficiently pled around the parol evidence bar to the oral contract. Admiral Oil Co. v. Lynch, 188 Cal.App.2d 269, 272 (1961) (upholding trial court's order sustaining demurrer because parol evidence could not be admitted to establish the existence of a trust agreement). - 14 Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

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In addition, Plaintiffs have not pled that the remedy at law is inadequate or make any allegation that a damages award is insufficient to redress the harms claimed. Plaintiffs' twelfth claim for specific performance should be dismissed. N. Plaintiffs' Thirteenth Cause of Action for Declaratory Relief Must Fail. Declaratory relief requires a present and actual controversy between parties to an existing or future right. Code Civ. Proc. § 1060. Plaintiffs' claims fail against Aurora: the foreclosure sale is final and there is nothing left to enjoin or declare. See Donald v. Café Royal, 218 Cal.App.3d 168, 184 (1990). Plaintiffs' request to set aside the legitimate non-judicial foreclosure sale would be an impermissible usurpation of California's non-judicial foreclosure procedures. BFP, supra, 511 U.S. 531. To obtain injunctive relief to overturn a foreclosure, the borrower must unambiguously tender payment of any amounts admittedly owed to the lender. Gaffney v. Downey Sav. & Loan, 200 Cal.App.3d 1154, 1165 (1988). Plaintiffs' Complaint does not allege a tender of any amounts necessary to upset the trustee's sale and cancel the trustee's deed. declaratory relief should be dismissed. O. Plaintiffs' Fourteenth Cause of Action for Violation of Truth In Lending Act and Other Federal Lending Statutes Must Fail. The fourteenth cause of action for violation of the federal lending statutes fails because the allegations reveal a fatal flaw on their face: a claim for damages has expired due to the one-year statute of limitations and any possible remaining claims have been extinguished by the three-year statutes of repose. Plaintiff Scott Zimmerman executed the loan documents for the loans at issue in this case in December, 2004. Any claim for damages under TILA, HOEPA or RESPA necessarily arose at that time. Larsen v. Cal. Fed. Bank, 76 F.3d 387 (9th Cir. 1996). Plaintiffs have generally alleged that disclosures were not given as required and thus, that Aurora violated TILA, 15 U.S.C. §§ 1601 et seq., HOEPA, 15 U.S.C. §§ 1602 et seq. and RESPA, 12 U.S.C. §§ 2601 et seq. Plaintiffs fail to state which disclosures were not given or why TILA, HOEPA and RESPA may have any application in this case. (Compl. ¶ 107). If Plaintiffs could demonstrate that one or all of the - 15 Memorandum of Points and Authorities in Support of Aurora's Motion to Dismiss and/or to Strike Punitive Damages

Thus, the thirteenth claim for

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federal lending statutes were violated, they fail to allege how these violations might be imputed to Aurora, as the face of the deeds of trust at issue reveal that it was another entity that extended credit to the Plaintiffs. (Jarboe Decl., Exhibits D & E). 1. Plaintiffs' Damages Claim Under TILA Must Fail Because Aurora was not the Creditor in the Transaction.

The Complaint makes a bare, unsupported claim that TILA was violated and thus, that Plaintiff is entitled to damages from Aurora. (Compl. p. 22, line 3). TILA, 15 U.S.C. §§ 1641(e), and its implementing legislation, Regulation Z ("Reg. Z")1 provides that only the original creditor is liable for disclosure errors not apparent on the face of the documents. Plaintiffs have alleged that the deeds of trust named Aurora as trustee. (Compl. ¶ 10); that Aurora was an assignee of the notes (Compl. ¶ 11) and that Aurora was the loan servicer (Compl. ¶ 52). Plaintiffs have not alleged any facts necessary to make Aurora (as a trustee under the deed of trust, assignee of notes, or as a loan servicer) liable for damages for a disclosure violation under TILA, HOEPA or RESPA. There is no authority for the proposition that a trustee under a deed of trust is responsible for disclosure violations under TILA or HOEPA. See Stevens v. Ocwen Federal Bank, FSB, 2007 WL 1601484, *1 (D.Utah 2007).Likewise, a loan servicer is not liable under TILA or HOEPA. 15 U.S.C. § 1641(f). A subsequent assignee is only liable for violations apparent on the face of the documents. 15 U. S.C. § 1641(a). Plaintiffs have failed to plead what the disclosure violations were or that any violation appeared on the face of the documents. As a result, Plaintiffs have failed to state a claim against Aurora. 2. Plaintiffs' Claim Under HOEPA Must Fail.

Plaintiffs' claim under HOEPA fails because Plaintiffs have not plead that HOEPA applies and that the loan in question was a high cost loan as defined by HOEPA. The first prong of the HOEPA test are loans where the annual percentage rate on first lien loans exceeded the yield on comparable treasury securities by 8%. Reg. Z., 12 C.F.R. §226.32(a)(1)(i). The second prong of the
Regulation Z, 12 C.F.R. § 226.2 (17) Creditor means: (i) A person (A) who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments (not including a downpayment), and (B) to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract.
1

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HOEPA test is whether the loan had points and fees in excess of 8% of the total loan amount. 15 U.S.C. §1602(aa)(1)(B). Id. Plaintiffs set forth no facts showing that the loan was a HOEPA loan under either prong of the HOEPA test. In re Luciano, 200 Fed.Appx. 628 (9th Cir., 2006) (holding that Plaintiff had failed to allege sufficient facts showi