Ray v. U.S. Bank Trust, N.A.

Background

Randall David Ray sued U.S. Bank Trust, N.A., as trustee for LSF10 Master Participation Trust (LSF10), and Caliber Home Loans, Inc. (Caliber), after foreclosure proceedings involving property at 22435 Moyers Street in Castro Valley. Ray alleged that he owned the property and that the property was sold to Michelle Vasey for $763,600. LSF10 removed the case from California state court to federal court.

Ray’s first amended complaint asserted four claims against LSF10 and Caliber: wrongful foreclosure; violation of California Civil Code section 2923.55; breach of the implied covenant of good faith and fair dealing; and violation of California Business and Professions Code section 17200, California’s unfair-competition law.

Motions and Analysis

LSF10 and Caliber each moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The court generally had to accept the complaint’s factual allegations as true, but the allegations still had to support a plausible legal claim.

For wrongful foreclosure, Ray alleged that Caliber failed to contact him 30 days before recording the notice of default, making the notice defective. Ray conceded in his opposition briefs that he could not challenge the foreclosure process on that theory after the foreclosure sale had occurred. The court therefore dismissed the wrongful-foreclosure claim against each defendant. As to Caliber, the court did not reach Caliber’s additional arguments concerning heightened fraud pleading requirements or the requirement that Ray pay, or be excused from paying, the secured debt.

Ray sought to withdraw his claim under California Civil Code section 2923.55, and the court dismissed that claim against both defendants. Ray also conceded that his claim for breach of the implied covenant of good faith and fair dealing should be dismissed. As to LSF10, the court granted dismissal because Ray acknowledged that his allegations were deficient and did not respond to LSF10’s argument that he had not provided facts supporting his assertion that payments were misapplied. The court dismissed the corresponding claim against Caliber based on Ray’s concession.

For the California unfair-competition claim, the court focused on standing. A private plaintiff must allege an economic injury caused by the challenged business practice. The court found that Ray’s amended allegations repeated the allegations in his original complaint and did not provide a theory showing that LSF10’s or Caliber’s conduct caused the loss of his home. The court dismissed the unfair-competition claim against both defendants.

Disposition

The court granted LSF10’s and Caliber’s motions to dismiss. It dismissed the claims under California Civil Code section 2923.55 and California Business and Professions Code section 17200 with prejudice because Ray had already amended his complaint and further amendment would be futile. It dismissed the wrongful-foreclosure and breach-of-good-faith-and-fair-dealing claims with leave to amend because Ray, who had become self-represented after his counsel withdrew, said he could allege additional facts. Judge Donna M. Ryu gave Ray one final opportunity to file a second amended complaint by September 25, 2023, and stated that he could not re-plead claims dismissed with prejudice.