Mcintosh v. Wells Fargo Bank, N.A.

Background

Myrian Y. McIntosh sued Wells Fargo Bank, N.A., U.S. Bank, N.A., and Catamount Properties, LLC, concerning a $680,000 Pick-a-Payment refinance loan secured by a deed of trust on property located at 102 Ford Drive, American Canyon, California. She alleged that the defendants breached a class-action settlement agreement, breached the deed of trust, violated the covenant of good faith and fair dealing, violated California’s Homeowner Bill of Rights, wrongfully foreclosed, and used instruments that should be canceled. She also sought quiet title relief against Catamount.

Evidence and Threshold Issues

The court granted the defendants’ requests for judicial notice and considered the submitted public records and loan-modification documents. It treated the fact that a Wells Fargo representative filed a declaration stating that the servicer had contacted McIntosh as established, but did not take judicial notice of whether the declaration’s statement was true.

The defendants argued that the statutes of limitations barred McIntosh’s claims. The court declined to dismiss the amended complaint on that basis at the pleading stage because McIntosh plausibly alleged that she did not know about her claims until the August 2019 foreclosure. The court stated that limitations issues could still create a barrier later.

U.S. Bank and Catamount argued that claim preclusion, also called res judicata, barred the claims because of the prior bankruptcy adversary action. The court concluded that the earlier dismissal under Rule 12(b)(6) was not a jurisdictional dismissal and therefore likely constituted a final judgment on the merits for claim-preclusion purposes. The court nevertheless evaluated the claims against Wells Fargo and, for completeness, evaluated the claims against the other defendants. It directed that any amended complaint address this issue.

Claims and Rulings

Contract and promissory estoppel. McIntosh alleged that the defendants breached the class-action settlement by failing to offer her another loan modification in 2015. The court held that the settlement terms made her a Class A member because she had already obtained a modification that converted her Pick-a-Payment loan. Under the settlement, she was therefore ineligible for the additional modifications available to certain Class B and C members. The court also found that the settlement required continued evaluation for possible modifications, not a guaranteed modification, and that McIntosh had received another modification in 2011. The court rejected her theory that the 2011 modification changed her from Class A to Class B.

McIntosh also claimed that the defendants breached the deed of trust because its choice-of-law provision meant that the deed was governed in part by the Homeowner Bill of Rights. The court found that she cited no authority for that theory and did not identify another specific deed-of-trust provision that the defendants violated. Both breach-of-contract claims were dismissed.

McIntosh pleaded promissory estoppel in the alternative, but only conclusorily. She did not respond to the defendants’ arguments against those claims. The court treated the claims as waived and dismissed them.

Covenant of good faith and fair dealing. The court dismissed this claim because McIntosh had not plausibly alleged that she performed her obligations under the relevant contracts or was excused from doing so. The court explained that the covenant cannot create duties beyond the contracts’ specific terms.

Homeowner Bill of Rights. McIntosh alleged that Wells Fargo failed to contact her about foreclosure alternatives and recorded a declaration falsely stating that it had done so. The court held that her allegation of a violation of California Civil Code section 2924.17 was implausible in light of the recorded declaration. It also ruled that McIntosh could not amend her complaint through her briefing in response to the motions. The Homeowner Bill of Rights claim was dismissed.

Wrongful foreclosure. The court stated that a wrongful-foreclosure claim generally requires an illegal, fraudulent, or oppressive sale, resulting harm, and payment or a legally recognized excuse from paying the secured debt. The parties agreed that McIntosh had not tendered, or offered to tender, the debt. The court rejected her argument that the alleged contract and Homeowner Bill of Rights violations excused tender, explaining that those allegations concerned a potentially voidable transaction, not a loan or deed of trust that was void from the beginning. The wrongful-foreclosure claim was dismissed.

Cancellation of instruments. The court dismissed this derivative claim because McIntosh had not plausibly alleged wrongful conduct or that the relevant instrument was void or voidable. It also held that, because she alleged a voidable rather than void transaction, tender was required and had not been made.

Quiet title. The court dismissed the quiet-title claim because quiet title is a remedy rather than a standalone cause of action, and McIntosh had not shown an underlying substantive right to relief. The court additionally held that the completed foreclosure sale could not be set aside absent fraud under the authority discussed in the opinion. McIntosh did not allege fraud and stated that she alleged no wrongdoing by Catamount.

Disposition

Judge Richard Seeborg granted the defendants’ motions to dismiss. The order states that each cause of action was dismissed, while giving McIntosh leave to amend to the extent she could cure the identified defects. Any amended complaint was due within 21 days of the June 11, 2020 order.