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

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

TODD A. BOOCK (SBN 181933)
2 Email: todd.boock@akerman.com
IMRAN HAYAT (SBN 224458)
3 Email: imran.hayat@akerman.com
725 South Figueroa Street, 38th Floor
4 Los Angeles, California 90017-5433
Telephone: (213) 688-9500
5 Facsimile: (213) 627-6342
JUSTIN D. BALSER (SBN 213478)
7 Email: justin.balser@akerman.com
VICTORIA E. EDWARDS (SBN 269305)
8 Email: victoria.edwards@akerman.com
511 Sixteenth Street, Suite 420
9 Denver, Colorado 80202
Telephone: (303) 260-7712
10 Facsimile: (303) 260-7714
TEL.: (213) 688-9500 – FAX: (213) 627-6342
11 Attorneys for Defendants

AKERMAN SENTERFITT LLP
725 S. FIGUEROA STREET, SUITE 3800
LOS ANGELES, CALIFORNIA 90017
AURORA LOAN SERVICES LLC and

12 DEUTSCHE BANK TRUST COMPANY AMERICAS, as trustee for Residential
Accredit Loans, Inc. Mortgage Asset-Backed Pass-Through Certificates, Series 2007-
13 QH9 incorrectly named as DEUTSCHE BANK NATIONAL TRUST
COMPANY AMERICAS
14
15 UNITED STATES DISTRICT COURT
16 CENTRAL DISTRICT OF CALIFORNIA – SOUTHERN DIVISION
17 EDDIE YAU and GLORIA YAU, on Case No. SACV11-00006-JVS (RNBx)
behalf of themselves and all others Assigned to the Hon. James V. Selna
18 similarly situated,
NOTICE OF MOTION AND
19 Plaintiffs, MOTION BY DEFENDANTS TO
DISMISS PLAINTIFFS’
20 v. COMPLAINT; MEMORANDUM OF
POINTS AND AUTHORITIES
21 DEUTSCHE BANK NATIONAL TRUST
COMPANY AMERICAS, and AURORA Documents Filed Herewith:
22 LOAN SERVICES LLC, Inclusive, 1. Request for Judicial Notice
2. Proposed Order (Lodged)
23 Defendants.
Hearing Date:
24 Date: February 28, 2011
Time: 1:30 p.m.
25 Ctrm.: 10C
26
Complaint Filed: January 3, 2011
27 Trial Date: None
28
{DN056544;6} 1 CASE NO. SACV11-00006-JVS (RNBX)
NOTICE OF MOTION AND MOTION DISMISS COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES
1 TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD:

2 PLEASE TAKE NOTICE THAT on February 28, 2011, at 1:30 p.m., or as
3 soon thereafter as counsel may be heard, in Courtroom 10C of the above-entitled Court
4 located at 411 West Fourth Street, Santa Ana, California, defendants Aurora Loan
5 Services LLC (Aurora) and Deutsche Bank Trust Company Americas, as trustee for
6 Residential Accredit Loans, Inc. Mortgage Asset–Backed Pass-through Certificates,
7 Series 2007-QH9, incorrectly named as Deutsche Bank National Trust Company
8 Americas (Deutsche Bank), will and hereby do move this Court to dismiss plaintiffs’
9 complaint, with prejudice.
10 This motion is made pursuant to Rule 12(b)(6) of the Federal Rules of Civil
TEL.: (213) 688-9500 – FAX: (213) 627-6342
11 Procedure, and is based on the ground that plaintiffs fail to state a claim upon which
12 relief may be granted and the complaint is barred as a matter of law against Aurora and
13 Deutsche Bank. Further, Deutsche Bank moves to dismiss plaintiffs' complaint for lack
14 of standing.
15 This motion is based upon this notice, the attached memorandum of points and
16 authorities, and upon all papers and documents on file herein, the Court’s files
17 concerning this action, together with those facts and documents of which the parties
18 request judicial notice and/or matters which judicial notice is proper, as well as any oral
19 argument that may be presented at the time of the hearing.
20 Pursuant to Local Rule 7-3, counsel for defendants discussed the basis of this
21 motion with plaintiffs’ counsel via email on January 23, 2011. Counsel for defendants
22 also provided a copy of its motion to dismiss to plaintiffs' counsel prior to filing it.
23 Plaintiffs' counsel responded that she would "re-title" certain causes of action, to which
24 defendants' counsel responded that it was not the title of the claims but the substance of
25 the claims that were subject to dismissal.
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27
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1 Dated: January 25, 2011 Respectfully submitted,

3
4 By: /s/ Justin D. Balser
JUSTIN D. BALSER
5 TODD A. BOOCK
VICTORIA E. EDWARDS
6 IMRAN HAYAT
Attorneys for Defendants
7 AURORA LOAN SERVICES LLC and
DEUTSCHE BANK TRUST COMPANY
8 AMERICAS, as trustee for Residential
Accredit Loans, Inc. Mortgage Asset-
9 Backed Pass-Through Certificates, Series
2007-QH9
10
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TABLE OF CONTENTS
1
I. INTRODUCTION ................................................................................................1
2 II. FACTUAL BACKGROUND ..............................................................................2
3 III. LEGAL STANDARD ..........................................................................................2
IV. ARGUMENT........................................................................................................3
4
A. Plaintiffs’ Allegations at Most Relate Solely to Deutsche Bank in Its
5 Capacity as Trustee for the RALI 2007-QH9 Trust and Even Then, it is
not a Party to Any Agreement Alleged in the Complaint..........................3
6 B. HOLA Preemption Bars Some Claims Against Aurora ............................5
7 C. No Breach of the Trial HAMP Agreement (First Cause of Action)..........7
1. The Complaint Does Not Plead the Elements....................................8
8
2. There is No Private Right of Action Under HAMP...........................9
9 D. The Yaus Are Not Third Party Beneficiaries (Second Cause of Action) 10
10 E. No Specific Performance (Third Cause of Action)..................................14
F. No Unjust Enrichment (Fourth Cause of Action) ....................................15
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11
G. No Unfair Competition Law Claim (Fifth Cause of Action)...................16

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

13 I. No Fraudulent Inducement (Seventh Cause of Action)...........................20
J. No Fraud and Deceit (Eighth Cause of Action).......................................21
14
K. No Declaratory or Injunctive Relief (Ninth Cause of Action).................22
15 L. No Declaratory Relief (Tenth Cause of Action) ......................................23
16 M. No Constructive Trust (Eleventh Cause of Action).................................23
N. Plaintiffs Failed To Assert Any Basis For Class Treatment or a Class
17 Action .......................................................................................................23
18 V. CONCLUSION ..................................................................................................26
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{DN056544;6} i CASE NO. SACV11-00006-JVS (RNBX)
TABLE OF AUTHORITIES
1
Cases
2 Aleem v. Bank of Am., N.A.,
No. EDCV 09-1812 VAP, 2010 WL 532330 (C.D. Cal. Feb. 9, 2010) ..................16
3
AmChem Prods., Inc. v. Windsor,
4 521 U.S. 591 (1997) .................................................................................................24
Andrade v. Wachovia Mortgage, FSB,
5 No. 09 CV 0377 JM (WMc), 2009 WL 1111182 (S.D. Cal. April 21, 2009)...........6
6 Ashcroft v. Iqbal,
129 S.Ct. 1937 (2009) ................................................................................................3
7 Avirez Ltd. v. Resolution Trust Co.,
876 F. Supp. 1125 (C.D. Cal. 1995) ........................................................................22
8
Bell Atlantic v. Twombly,
9 550 U.S. 544, 127 S. Ct. 1955 (2007)........................................................................3
Bellomi v. Countrywide Fin. Corp.,
10 No. 09-cv-3431, 2009 WL 3680500 (N.D. Cal. Oct. 30, 2009) .......................22
Benham v. Aurora Loan Serv.,
TEL.: (213) 688-9500 – FAX: (213) 627-6342
11
No. C-09-2059, 2009 WL 2880232 (N.D. Cal. Sept. 1, 2009)................................17

12 Benito v. Indymac Mortgage Servs.,

No. 2:09-CV-1218-PMP-PAL, 2010 WL 2130648 (D. Nev. May 21, 2010) .........13
13
Brown v. Regents of University of California,
14 151 Cal.App.3d 982 (1984)......................................................................................25
Burtzos v. Countrywide Home Loans,
15 No. 09-cv-2027, 2010 WL 2196068 (S.D.Cal. June 1, 2010) .................................13
16 Camacho v. Wachovia Mortgage FSB,
No. 09cv1572, 2009 WL 5811698 (S.D. Cal. Nov. 3, 2009) ....................................7
17 Cel-Tech Comm. v. L.A. Cellular Tel. Co.,
20 Cal.4th 163 (1999) ..............................................................................................16
18
City of San Jose v. Superior Court,
19 12 Cal.3d 447 (1974) ...............................................................................................25
Conference of Fed. Sav. & Loan Ass'ns v. Stein,
20 604 F.2d 1256 (9th Cir. 1979)....................................................................................6
21 Cooper v. Pickett,
137 F.3d 616 (9th Cir. 1997)....................................................................................19
22 County of Santa Clara v. Astra, USA Inc.,
588 F.3d 1237 (9th Cir. 2009)..................................................................................12
23
Doniger v. Pac. Nw. Bell Inc.,
24 564 F.2d 1304 (9th Cir 1977)...................................................................................24
Escobedo v. Countrywide Home Loans, Inc.,
25 No. 09cv1557, 2009 WL 4981618 (S.D. Cal Dec. 15, 2009)..................................12
26 Fid. Fed. Sav. & Loan Ass'n v. de la Cuesta,
458 U.S. 141 (1982) ...................................................................................................6
27 Gibbons v. Interbank Funding Group,
208 F.R.D. 278 (N.D. Cal. 2002).............................................................................25
28
Gil v. Bank of Am., Nat'l Ass'n,
{DN056544;6} ii CASE NO. SACV11-00006-JVS (RNBX)
138 Cal.App.4th 1371 (2006) ..................................................................................19

1
Glass v. United States,
2 258 F.3d 1349 (Fed. Cir. 2001)................................................................................12
Golden West Baseball Co. v. City of Anaheim,
3 25 Cal. App. 4th 11, 31 Cal. Rptr. 2d 378 (Cal. Ct. App. 1994) .............................15
4 Gomez v. Wachovia Mortgage Corp.,
No. 09-2111, 2010 WL 291817 (N.D. Cal. Jan. 15, 2010) ...............................22
5 Grill v. BAC Home Loans Servicing, L.P.,
No. 10-cv-3057, 2011 WL 127891 (E.D. Cal. Jan. 14, 2011) ...................................8
6
Grosz v. Boeing Co.,
7 136 Fed. Appx. 960, 2005 WL 1515070 (9th Cir. 2005) ........................................25
Hammonds v. Aurora Loan Servs. LLC,
8 No. EDCV 10-1025, 2010 WL 3859069 (C.D. Cal. Sept. 27, 2010) ................10, 14
9 Hanon v. Dataproducts Corp.,
976 F.2d 497 (9th Cir. 1992)....................................................................................24
10 Harara v. ConocoPhillips Co.,
377 F. Supp. 2d 779, 796 n. 20 (N.D. Cal. 2005) ....................................................15
TEL.: (213) 688-9500 – FAX: (213) 627-6342
11
Haskett v. Villas at Desert Falls,

12 90 Cal.Ap.4th 864, , 108 Cal.Rptr.2d 888 (2001).......................................................4

Hernandez v. HomeEq Servicing,
13 No. 1:10cv01484 OWW DLB, 2010 WL 5059673 (E.D. Cal. Dec. 6, 2010)...........9
14 Hoffman v. Bank of Am.,
No. C 10-2171 SI, 2010 WL 2635773 (N.D. Cal. June 30, 2010) ............................2
15 Ingalsbe v. Bank of Am., N.A.,
No 1:10-cv-1665, 2010 WL 5279839 (E.D. Cal. Dec. 13, 2010)..............................9
16
Jogani v. Superior Court,
17 165 Cal. App. 4th 901 (2008) ..................................................................................15
Kamp v. Aurora Loan Servs. LLC,
18 No. SACV 09-00844, 2009 WL 3177636 (C.D. Cal. Oct. 1, 2009)........................14
19 Khoury v. Maly’s of Cal.,
14 Cal.App.4th 612 (1993) ......................................................................................17
20 Klamath Water User Protective Ass'n v. Patterson,
204 F.3d 1206 (9th Cir. 2000)..................................................................................11
21
La Mar v. H&B Novelty & Loan Co.,
22 489 F.2d 461 (9th Cir. 1973).......................................................................................4
Lee v. U.S. Bank, N.A.,
23 No. C 10-1434, 2010 WL 2635777 (N.D.Cal. June 30, 2010) ................................18
24 Levine v. Blue Shield of Cal.,
189 Cal. App. 4th 1117 (2010) ................................................................................15
25 Livid Holdings, Ltd. v. Salomon Smith Barney, Inc.,
416 F.3d 940 (9th Cir. 2005)......................................................................................3
26
Lujan v. Defenders of Wildlife,
27 504 U.S. 555, 112 S.Ct 2130, 119 L.Ed.2d 351 (1992).............................................3
Mabry v. Superior Court,
28 185 Cal.App.4th 208 (2010) ......................................................................................1
{DN056544;6} iii CASE NO. SACV11-00006-JVS (RNBX)
Marketing West, Inc. v. Sanyo Fisher (USA) Corp.,

1 6 Cal. App. 4th 603 (1992) ......................................................................................19
2 Marks v. Bank of Am., N.A.,
No. 3:10-cv-8039, 2010 WL 2572988 (D. Ariz. June 22, 2010).............................13
3 Marques v. Wells Fargo Home Mortgage, Inc.,
No. 09-cv-1985, 2010 WL 3212131 (S.D. Cal. Aug. 12, 2010)..............................14
4
MB Techs, Inc. v. Oracle Corp.,
5 No. C 09-5988, 2010 WL 1576686 (N.D. Cal. April 19, 2010)..............................15
Mix v. Sodd,
6 126 Cal. App. 3d 386 (1981)....................................................................................22
7 Moore v. Kayport Package Express, Inc.,
885 F.2d 531 (9th Cir. 1989)....................................................................................19
8 Mugica v. Aurora Loan Servs. LLC,
No. SACV 09-1086, 2009 WL 3467750 (C.D. Cal. Oct. 28, 2009)........................14
9
Naulty v. GreenPoint Mortg. Funding, Inc.,
10 No. C 09-1542, 2009 WL 2870620 (N.D.Cal. Sept. 3, 2009) ...................................7
Neubronner v. Milken,
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11 6 F.3d 666 (9th Cir. 1993)........................................................................................19

12 Orcilla v. Bank of Am., N.A.,

No. C10-3931, 2010 WL 5211507 (N.D. Cal. Dec. 16, 2010)................................14
13 Orff v. United States,
358 F.3d 1137 (9th Cir. 2004)..................................................................................11
14
Petrie v. Elec. Game Card Inc.,
15 No. SACV 10-00252 DOC (RNBx), 2011 WL 165402 (C.D. Cal. Jan, 12, 2011)...3
Reyes v. Saxon Mortgage Servs. Inc.,
16 No. 09cv1366, 2009 WL 3738177 (S.D. Cal. Nov. 5, 2009) ..................................14
17 Reyes v. Wells Fargo Bank, N.A.,
No. C 10-1667 JCS, 2011 WL 30759 (N.D. Cal. Jan. 3, 2011) ..............................16
18 Sacks v. Office of Foreign Assets Control,
466 F.3d 764 (9th Cir. 2001).......................................................................................3
19
SEC v. Prudential Secs., Inc.,
20 136 F.3d 153 (D.C. Cir. 1998) .................................................................................12
Silvas v. E*Trade Mortgage Corp.,
21 514 F.3d 1001 (9th Cir. 2008)..............................................................................6, 18
22 Smith v. Cent. Ariz. Water Conservation Dist.,
418 F.3d 1028 (9th Cir. 2005)..................................................................................11
23 Spelos v. BAC Home Loans Servicing, L.P.,
No. 10-11503, 2010 WL 5174510 (D. Mass. Dec. 14, 2010) .................................14
24
Sprewell v. Golden State Warriors,
25 266 F.3d 979 (9th Cir. 2001)......................................................................................3
State Farm Bank, FSB v. Reardon,
26 539 F.3d 336 (6th Cir. 2008)......................................................................................5
27 Vida v. OneWest Bank, F.S.B.,
No. 10-987, 2010 WL 5148473 (D. Or. Dec. 13, 2010)..........................................10
28 Villa v. Wells Fargo Bank, N.A.,
{DN056544;6} iv CASE NO. SACV11-00006-JVS (RNBX)
2010 WL 935680 (S.D. Cal. March 15, 2010).........................................................14

1
W. Mining Council v. Watt,
2 643 F.2d 618 (9th Cir. 1981)......................................................................................3
Walker v. Countrywide Home Loans,
3 98 Cal. App. 4th 1158 (2002) ..................................................................................17
4 Wall Street Network, Ltd. v. New York Times Co.,
164 Cal. App. 4th 1171 (2008) ..................................................................................7
5 Watters v. Wachovia Bank, N.A.,
550 U.S. 1, 127 S.Ct. 1559 (2007).............................................................................5
6
Weiner v. Klais & Co.,
7 108 F.3d 86 (6th Cir. 1997)......................................................................................22
Wells Fargo Bank v. Small,
8 2010 N.Y. Slip Op. 30424(U) 2010 WL 835462 (N.Y. Sup. Ct. Feb. 16, 2010)....14
9 Wilkerson v. World Sav. & Loan Ass'n,
No. S-08-2168, 2009 WL 2777770 (E.D. Cal., Aug. 27, 2009) ................................7
10 Williams v. Geithner,
No. 09-1959, 2009 WL 3757380 (D. Minn. Nov. 9, 2009).....................................11
TEL.: (213) 688-9500 – FAX: (213) 627-6342
11
Ziner v. Accuflux Research Inst., Inc.,

12 253 F.3d 1180 (9th Cir. 2001)..................................................................................24

Statutes
13
12 C.F.R. § 559.2 ............................................................................................................5
14 12 C.F.R. § 559.3(n)(1)...................................................................................................5
15 12 C.F.R. § 560.2 ............................................................................................................6
12 C.F.R. § 560.2(a) .......................................................................................................6
16
12 C.F.R. § 560.2(b)(1)-(13)...........................................................................................6
17 12 U.S.C. § 1461.............................................................................................................6
18 12 U.S.C. § 1464.............................................................................................................6
12 U.S.C. § 5201...........................................................................................................10
19
12 U.S.C. § 5201(2) ......................................................................................................10
20 Business & Professions Code § 17204 .........................................................................17
21 Business & Professions Code §17200 ..........................................................................16
Civil Code § 2224 .........................................................................................................16
22
Civil Code § 2923.5 ........................................................................................................1
23 Code of Civil Procedure § 580d ...................................................................................21
24 Code of Civil Procedure § 726 ...............................................................................17, 18
Rules
25
Fed. R. Civ. P. 12(b)(6) ..............................................................................................2, 3
26 Fed. R. Civ. P. 23(a) .....................................................................................................23
27 Fed. R. Civ. P. 23(b ......................................................................................................24
Fed. R. Civ. P. 9(b) .......................................................................................................19
28
{DN056544;6} v CASE NO. SACV11-00006-JVS (RNBX)
1 MEMORANDUM OF POINTS AND AUTHORITIES

2 I. INTRODUCTION
3 Plaintiffs bring this purported class action lawsuit premised on the Home
4 Affordable Modification Program (HAMP). All of their claims are based on HAMP and
5 the contention they were denied a HAMP modification. However, the overwhelming
6 consensus amongst federal courts around the country is no right of action exists for
7 borrowers under HAMP. All claims should be dismissed no matter who is the plaintiff.
8 First and foremost, Deutsche Bank, in relation to the Yaus loan, is merely the
9 trustee of the RALI 2007-QH9 securitization. Plaintiffs fail to make this critical
10 distinction between that and Deutsche Bank in its individual corporate capacity. No
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11 claims can be had against the latter as plaintiffs lack standing to sue the corporate entity.
12 Plaintiffs allege Aurora and Deutsche Bank committed wrongdoing because they
13 denied plaintiffs a HAMP modification. This is a common fundamental
14 misunderstanding of how HAMP works. Plaintiffs operate under the incorrect premise
15 that HAMP, or any alleged violation thereof, provides for a private right of action—it
16 does not. Plaintiffs are not intended beneficiaries under the HAMP servicer agreements
17 between Aurora and FNMA/Freddie Mac.
18 Plaintiffs introduce allegations about credit default swaps claiming it bears
19 relationship to the loan owner or servicer being made whole upon a borrower’s default.
20 This allegation is nonsensical. Credit default swaps are not relevant.
21 This action must also be dismissed because it is not suitable for class treatment.
22 Distinct factual and numerous individualized issues predominate over any of the
23 common legal issues the potential class claimants share. In the words of Chief Justice
24 Sills of the Fourth District Court of Appeals in Santa Ana, "how in the world would a
25 court certify a class?"1
26 1
See Mabry v. Superior Court, 185 Cal.App.4th 208, 236 (2010). There the Court was
27 presented with a similar purported "class" and held that a statute—Civil Code §
2923.5—was incapable of class treatment due to the overwhelming individualized
28 circumstances that class treatment was impractical. The same is true here. This
assumes plaintiffs could even overcome the overwhelming case law throughout the
Case 8:11-cv-00006-JVS -RNB Document 35 Filed 01/25/11 Page 10 of 34 Page ID
#:768
1 For these and other reasons described below, this case should be dismissed with
2 prejudice.
3 II. FACTUAL BACKGROUND
4 On July 6, 2007, plaintiff Mr. Yau refinanced his prior mortgage loan with a
5 $608,000 loan (Loan) from Homecomings Financial, LLC. (Request for Judicial Notice
6 (RJN), Ex. 1; Compl. ¶ 82.) Aurora services the Loan. (Compl. ¶¶ 37, 85.) The Yaus
7 began having financial difficulties in 2008, and sought loss mitigation assistance in 2008
8 and 2009. (Id. ¶¶ 87-95.) On September 24, 2009, Aurora offered Mr. Yau a HAMP
9 trial plan. (Id. Ex. 3.) On March 6, 2010, Mr. Yau was denied a permanent HAMP loan
10 modification because of “excessive forbearance,” i.e., at that time Mr. Yau’s financial
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11 situation was such that Aurora could not “create an affordable payment equal to 31%” of
12 the Yau’s reported monthly gross income “without changing the terms [of the Loan]
13 beyond the requirements of the program.” (Id. Ex. 5.) As is clear from Exhibit 5
14 attached to plaintiffs’ complaint, the Yaus were never “enrolled in the HAMP program”
15 because they did not qualify for HAMP at that time. (Id. ¶ 37.)
16 As of April 7, 2010, the Yaus were $27,291.92 behind on their monthly mortgage
17 payments. (Id. Ex. 6 at 3.) Aurora made further attempts at helping the Yaus avoid
18 foreclosure by offering them a Special Forbearance Agreement. (Id. Ex. 6.) While the
19 Yaus were making payments under this forbearance agreement, the Yaus re-applied for a
20 HAMP plan. (Id. ¶¶ 120, 129.) They then brought this suit.
21 III. LEGAL STANDARD
22 “A plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’
23 requires more than labels and conclusions, and a formulaic recitation of the elements of
24 a cause of action will not do.” Bell Atlantic v. Twombly, 550 U.S. 544, 127 S. Ct. 1955,
25 1964-65 (2007). “[F]actual allegations must be enough to raise a right to relief above
26 the speculative level.” Id. at 1965. In considering a motion pursuant to Federal Rules of
27
federal courts that borrowers have no right of action under HAMP. See Hoffman v.
28 Bank of Am., No. C 10-2171 SI, 2010 WL 2635773, at *5 (N.D. Cal. June 30, 2010).
#:769
1 Civil Procedure 12(b)(6), a court need not accept as true unreasonable inferences or
2 conclusory legal allegations cast in the form of factual allegations. See Sprewell v.
3 Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); W. Mining Council v. Watt,
4 643 F.2d 618, 624 (9th Cir. 1981).
5 In a recent decision, the Supreme Court reviewed the standard for a pre-answer
6 motion to dismiss. Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009). The Supreme Court in
7 Iqbal clarified that “[i]n order for a complaint to survive a 12(b)(6) motion, it must state
8 a claim for relief that is plausible on its face.” Petrie v. Elec. Game Card Inc., No.
9 SACV 10-00252 DOC (RNBx), 2011 WL 165402, at *2 (C.D. Cal. Jan, 12, 2011)
10 (citing Ashcroft, 129 S.Ct. at 1950). Critically, a complaint must offer more than an
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11 “unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft, 129 S.Ct. at

12 1949. “[N]aked assertions devoid of further factual enhancement” no longer suffice to

13 state a claim. Id. (internal quotation omitted). Dismissal with prejudice is proper if “it is
14 clear that the complaint could not be saved by any amendment.” Livid Holdings, Ltd. v.
15 Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005).
16 IV. ARGUMENT
17 A. Plaintiffs’ Allegations at Most Relate Solely to Deutsche Bank in Its Capacity
18 as Trustee for the RALI 2007-QH9 Trust and Even Then, It Is Not a Party to
19 Any Agreement Alleged in the Complaint
20 Plaintiffs must plead facts showing that they have standing to sue. See Sacks v.
21 Office of Foreign Assets Control, 466 F.3d 764, 771 (9th Cir. 2001). To satisfy the
22 “irreducible constitutional minimum” of standing, Plaintiffs must establish three
23 elements: (1) injury-in-fact; (2) traceability; and (3) redressability. See Lujan v.
24 Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct 2130, 119 L.Ed.2d 351 (1992).
25 “Traceability” requires a plaintiff to demonstrate that this injury was caused by the
26 challenged conduct of the defendant. Id. at 560. In a putative class action, named
27 plaintiffs do not acquire standing by virtue of bringing a class action, and the individual
28 standing of each named plaintiff vis-à-vis each defendant is a threshold issue. See
#:770
1 Fallick v. Nationwide Mut. Ins. Co., 162 F.3d 410, 423 (6th Cir.1998). A plaintiff with a
2 claim against one defendant cannot bring class action against both that defendant and an
3 unrelated group of other defendants (on behalf of those injured by the that defendant),
4 even if the other defendants are engaged in the same conduct as the one defendant. See
5 La Mar v. H&B Novelty & Loan Co., 489 F.2d 461, 462 (9th Cir. 1973).
6 At most, plaintiffs only have standing to sue Deutsche Bank in its capacity as
7 trustee for the RALI QH-9 Trust, which owns their loan. Facts sufficient to establish
8 standing to bring claims against Deutsche Bank in its capacity as trustee for one trust,
9 are insufficient to establish standing to assert claims against Deutsche Bank in its
10 individual capacity or as trustee for other trusts, which are separate legal entities. See
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11 Cal. Prob. Code, § 18001; Haskett v. Villas at Desert Falls, 90 Cal.App.4th 864, 878-79
12 (2001); Easter v. Am. W. Fin., 381 F.3d 948, 963 (9th Cir. 2004). That is, plaintiffs
13 cannot simply name "Deutsche Bank" and try to tie in other securitizations to this
14 lawsuit where Deutsche Bank is also trustee. Further, plaintiffs have not alleged how
15 Deutsche Bank, in its individual or corporate capacity, has wronged them. Even in its
16 capacity as trustee of the trust holding the Yau’s Loan, Deutsche Bank is merely the
17 trustee of a securitization and has no involvement in the servicing of their loan,
18 including any decision about its modification.
19 Recently, Judge Real, presented with a similar situation in Orellana v. Deutsche
20 Bank Nat’l Trust Co., No. 2:09-cv-09367-R-PLA (C.D. Cal. June 6, 2010) dismissed a
21 putative class action complaint finding that the plaintiffs could not assert a traceable
22 injury to Deutsche Bank. (RJN Ex. 4.) Judge Real ordered that, because the complaint
23 did not meet federal standing requirements, the complaints by other plaintiffs could only
24 be brought on an individual basis in state court.
25 A similar complaint was rejected by a federal court in Missouri. See Mayo v.
26 GMAC Mortgage LLC, No. 08-00568-CV-W-DGK (W.D. Mo. Mar. 1, 2010) (see RJN
27 Ex. 5.) There the Court dismissed a class complaint against Deutsche Bank, except in its
28 capacity as trustee of the specific trust that held the named plaintiff’s loan, because
#:771
1 plaintiffs could not trace injury or wrongdoing to Deutsche Bank either as the trustee of
2 other, unrelated trusts, or in an individual capacity. The Court in that case held that
3 "because the Complaint does not allege that DBNTC has any interest in Plaintiffs' loan
4 in its unaffiliated capacities, Plaintiffs cannot make DBNTC in its unaffiliated capacities
5 as defendant by characterizing this lawsuit as a putative class action." (Id. p. 7.) As this
6 complaint is similarly devoid of any pleading of wrongdoing by Deutsche Bank in its
7 individual capacity or in its capacity as trustee for other unidentified, unrelated trusts,
8 plaintiffs have not adequately plead standing, and Deutsche Bank should be dismissed in
9 those “unaffiliated” capacities.
10 Furthermore, even in its capacity as trustee for the RALI 2007-QH9 trust (or in
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11 any other capacity), Deutsche Bank is not a party to any of the agreements alleged in the
12 complaint, as is clear from their face. (Compl. Exs. 1, 2, Servicer Participation

13 Agreements (SPA).) Nor is Deutsche Bank, in any capacity, party to the HAMP trial
14 plan or the forbearance agreement that the Yaus mention. (Id. Exs. 3, 6.) Therefore,
15 although most allegations of the complaint are alleged against "defendants," presumably
16 including Deutsche Bank, to the extent those allegations are founded on obligations in
17 the SPAs, the HAMP trial modification, or the special forbearance agreement to which
18 Aurora was a party with the Yaus, Deutsche Bank cannot be held liable.
19 B. HOLA Preemption Bars Some Claims Against Aurora
20 In support of their claims for “Unlawful/Unfair Acts § 17200” (fifth claim) and
21 “Fraud” (sixth claim), plaintiffs take issue with the way Aurora services loans, and
22 contend Aurora failed to make certain disclosures about their Loan and the HAMP
23 program. These claims fail in part because they are preempted. Aurora is a wholly-
24 owned direct subsidiary of Aurora Bank FSB (See RJN Exs. 2-3; Compl. ¶ 65.) Aurora
25 Bank is a federally chartered bank; Aurora, as its operating subsidiary, enjoys the same
26 federal preemption rights. See Watters v. Wachovia Bank, N.A., 550 U.S. 1, 127 S.Ct.
27 1559, 1572 (2007), State Farm Bank, FSB v. Reardon, 539 F.3d 336, 345 (6th Cir. 2008)
28 (preemption applies to exclusive agents of federal savings association); 12 C.F.R. §§
#:772
1 559.2, 559.3(n)(1). As such, the mortgage acquisition and servicing operations of

2 Aurora are subject to a comprehensive scheme of federal regulation: the Home Owner’s
3 Loan Act (HOLA), 12 U.S.C. §§ 1461 et seq., and the regulations promulgated
4 thereunder by the Office of Thrift Supervision (OTS). See 12 C.F.R. § 560.2(b)(1)-(13).
5 Congress enacted HOLA in 1933 in order to "restore public confidence by
6 creating a nationwide system of federal savings and loan associations to be centrally
7 regulated according to nationwide 'best practices.'" Fid. Fed. Sav. & Loan Ass'n v. de la
8 Cuesta, 458 U.S. 141, 160-61 (1982). Congress gave OTS "broad authority to issue
9 regulations governing thrifts." Silvas v. E*Trade Mortgage Corp., 514 F.3d 1001, 1005
10 (9th Cir. 2008) (citing 12 U.S.C. § 1464). In 1996, the OTS promulgated 12 C.F.R. §
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11 560.2 to further Congress's goal of achieving a uniform set of regulations governing

12 federal savings associations. The regulation provides that residential mortgage lending
13 and servicing activity conducted by a federal savings association and its subsidiaries are
14 not subject to state laws, regardless of how they are labeled, that attempt to regulate
15 mortgage lending or servicing. 12 C.F.R. § 560.2(a) ("OTS hereby occupies the entire
16 field of lending regulation for federal savings associations"). "Under HOLA, OTS
17 enjoys 'plenary and exclusive authority…to regulate all aspects of the operations of
18 Federal savings associations' and its authority 'occupies the entire field of lending
19 regulation for federal savings associations.'" Andrade v. Wachovia Mortg., FSB, No. 09
20 CV 0377 JM (WMc), 2009 WL 1111182, at *2 (S.D. Cal. 2009). "The Ninth Circuit
21 agreed, characterizing the enabling statute and subsequent agency regulations as 'so
22 pervasive as to leave no room for state regulatory control.'" Id. (quoting Conference of
23 Fed. Sav. & Loan Ass'ns v. Stein, 604 F.2d 1256, 1260 (9th Cir. 1979).
24 Section 560.2(b) lists various categories of state laws preempted by OTS
25 regulations. They include:
26 (9) Disclosure and advertising, including laws requiring specific statements,
information, or other content to be included in credit application forms,
27 credit solicitations, billing statements, credit contracts, or other credit-related
documents and laws requiring creditors to supply copies of credit reports to
28 borrowers or applicants;
#:773
(10) Processing, origination, servicing, sale or purchase of, or investment or

1 participation in, mortgages." [emphasis added]
2
Here, the Yaus explicitly rely on state laws to claim Aurora should have made
3
certain disclosures and serviced their Loan differently. To allow such claims would
4
subject a federally-regulated entity, Aurora, to state law requirements in direct
5
contradiction of Congress's intent. Courts have repeatedly held HOLA preempts state
6
laws that relate to the servicing of a loan or that would mandate a national savings
7
association (or its subsidiary) to make particular disclosures. See Camacho v. Wachovia
8
Mortg. FSB, No. 09cv1572, 2009 WL 5811698, at *4 (S.D. Cal. Nov. 3, 2009) (UCL
9
claim based on disclosures preempted); see also Naulty v. GreenPoint Mortg. Funding,
10
Inc., No. C 09-1542, 2009 WL 2870620, at *4 (N.D. Cal. Sept. 3, 2009) ("Plaintiffs are
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11
attempting to leverage state law to impose requirements on the way Wachovia manages
12
its lending operation, including requirements regarding… disclosure and advertising, see
13
id. § 560.2(b)(9)"); Wilkerson v. World Sav. & Loan Ass'n, No. S-08-2168, 2009 WL
14
2777770, at *3 (E.D. Cal. 2009) ("To the extent plaintiff alleges in his complaint that
15
defendant was negligent in extending, setting the terms of or servicing his mortgage
16
loan…, it appears that such state law claims are preempted[.]").
17
In this case, Aurora contends part or all of the fifth and sixth causes of action are
18
preempted. Allegations about disclosures related to the Yaus' modification agreement,
19
as well as action taken in the servicing of the Loan, are not viable as fraudulent
20
concealment or Unfair Competition Law claims against Aurora.
21
C. No Breach of the Trial HAMP Agreement (First Cause of Action)
22
The first claim alleges Aurora breached a contract, the trial HAMP agreement, by
23
not completing a final loan modification. This claim must be dismissed because it does
24
not allege an enforceable agreement ever existed. The elements of breach of contract are
25
(1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3)
26
defendant's breach, and (4) damage to plaintiffs. E.g., Wall Street Network, Ltd. v. New
27
York Times Co., 164 Cal. App. 4th 1171, 1178 (2008). In addition, the claim is barred
28
#:774
1 because HAMP does not create a private right of action and the allegations of this
2 complaint are not sufficiently independent of HAMP to allow a private claim.
3 1. The Complaint Does Not Plead the Elements
4 The Yaus have not pled Aurora breached an enforceable agreement based on the
5 plain words of the contract. As the trial plan itself explains in its very first sentence, "If I
6 am in compliance with this Trial Period Plan…then the Lender will provide me with a
7 [HAMP] Agreement, as set forth in Section 3, that would amend the [note and
8 mortgage]." (Compl. Ex. 3.) Later in the document, the Yaus acknowledged they
9 understood the trial plan was not a loan modification and that the loan would not be
10 modified "unless and until (i) I meet all of the conditions required for a modification,
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11 …(ii) receive a fully executed copy of the Modification Agreement." (Id. Ex. 3, § 2(G).)
12 The same paragraph includes a further statement that the Yaus understood the servicer,
13 Aurora, would not be bound to modify the agreement if they failed any condition
14 thereof. (Id. Ex. 3, § 2(G).) In addition, the HAMP trial plan explains that "If I comply
15 with the requirements in Section 2 and my representations in Section 1 continue to be
16 true in all respects the Servicer will … send me a Modification Agreement for my
17 signature which will modify my Loan Documents[.]" (Id. Ex. 3, § 3.) Only upon
18 execution of that modification agreement would the loan be modified. (Id. Ex. 3, § 3.)
19 The conclusion to be drawn from these provisions is that the trial plan was not a
20 guarantee of a loan modification; rather that a loan modification was to be separately
21 agreed to and executed.
22 The Yaus' breach of contract claim is literally identical to an allegation that Judge
23 Damrell of the Eastern District of California recently dismissed. In Grill v. BAC Home
24 Loans Servicing, L.P., No. 10-cv-3057, 2011 WL 127891 (E.D. Cal. Jan. 14, 2011), the
25 plaintiff sued his servicer for breach of a HAMP trial plan. Because HAMP is a national
26 program with national standards, the relevant terms were identical to those in the Yaus'
27 trial plan. (Compare id. at *4 with Compl. Ex. 3.) Although the plaintiff in Grill, like
28 the Yaus here, alleged he qualified for a HAMP modification and had complied with the
#:775
1 agreement, the Court held he had failed to state a viable claim for breach of contract.
2 Judge Damrell reasoned as follows:
3 Accordingly, Exhibit C makes clear that providing the requested documents was
simply a part of the application process, which plaintiff was willing to complete
4 in the hope that BAC would modify his loan. Under the language of Exhibit C, a
binding modification would not result unless and until BAC determined that
5 plaintiff complied with the requirements. If BAC so determined, then it would
send plaintiff a modification agreement, including a new monthly payment
6 amount, which both plaintiff and defendant would execute.
7 Plaintiff has not alleged or provided exhibits (1) that BAC determined plaintiff
had met the requirements or (2) that BAC sent plaintiff a loan modification with a
8 new monthly payment that was then executed by both plaintiff and BAC. As
such, no binding contract has been alleged and BAC's motion to dismiss
9 plaintiff's breach of contract claim is GRANTED with leave to amend. Id. at *4.
10 The same conclusion is inescapable here. Aurora and the Yaus never reached a
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11 meeting of the minds as to a final loan modification agreement. While the Yaus allege
12 they “and the Class w[ere] eligible for HAMP” (Compl. ¶ 78), the clear words of the
13 HAMP trial plan at Ex. 3 clearly suggest otherwise. “On a motion to dismiss, the court
14 need not accept allegations as true if they are contradicted by documents before the
15 court….[W]hen a written instrument is attached to the pleading and properly
16 incorporated therein by reference, the court may examine the exhibit and treat the
17 pleader's allegations of its legal effect as surplusage.” Grill, 2011 WL 127891, at *3.
18 Therefore, no contract was breached.
19 2. There is No Private Right of Action Under HAMP
20 Because the breach of contract claim is effectively one alleging a breach of
21 HAMP, it cannot go forward because the law is clear that there is no private right of
22 action under HAMP. See, e.g., Ingalsbe v. Bank of Am., N.A., No 1:10-cv-1665, 2010
23 WL 5279839, at *5 (E.D. Cal. Dec. 13, 2010) (collecting cases and stating that the
24 "consensus among district courts in the Ninth Circuit is that there is no private right of
25 action under HAMP"); Hernandez v. HomeEq Servicing, No. 1:10cv01484 OWW DLB,
26 2010 WL 5059673, at *2-3 (E.D. Cal. Dec. 6, 2010); Hammonds v. Aurora Loan Servs.
27 LLC, No. EDCV 10-1025, 2010 WL 3859069 (C.D. Cal. Sept. 27, 2010). Torres v.
28
#:776
1 Litton Loan Servicing LP, No. 1:10-cv-01709-OWW-SKO, 2011 WL 149833 (E.D. Cal.
2 Jan. 18, 2011).
3 Just because a claim purports to be based on common law breach of contract does
4 not mean it can go forward if the underlying actions involve compliance with HAMP.
5 This was the situation presented in Vida v. OneWest Bank, F.S.B., No. 10-987, 2010 WL
6 5148473 (D. Or. Dec. 13, 2010). Like the Yaus, the plaintiff in that case alleged she had
7 complied with a HAMP trial modification agreement and therefore had an enforceable
8 promise to modify her loan. The Court disagreed. "The flaw in Vida's logic is that the
9 alleged offer to modify came about and was made wholly under the rubric of HAMP, as
10 were Vida's alleged actions in acceptance … Vida fails to state a cause of action
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11 independent of HAMP, for which there is no private right of action." Id. at *5. Here,
12 the Yaus' breach of contract claim is intertwined with the HAMP loan modification
13 process. It is has no independent content apart from the HAMP trial period plan. As a
14 result, the reasoning of Vida applies here. The first claim should also be dismissed
15 because HAMP does not allow for a private right of action.
16 D. The Yaus Are Not Third Party Beneficiaries (Second Cause of Action)
17 The second cause of action alleges the Yaus (and the putative class) may enforce
18 two contracts to which they are not parties, specifically contracts related to the federal
19 HAMP program. This has become a common allegation in complaints by defaulting
20 home loan borrowers seeking to twist the general desire of the federal government to
21 help qualified borrowers stay in their homes into a mandate for specific modifications.
22 Numerous courts, state and federal, have reviewed this issue and concluded that HAMP
23 may not be enforced by borrowers on a third-party beneficiary theory.
24 On October 3, 2008, Congress enacted the Emergency Economic Stabilization Act
25 of 2008 (EESA), 12 U.S.C. § 5201, et seq., which allocated $700 billion to the U.S.
26 Treasury "to restore liquidity and stability to the financial system." 12 U.S.C. § 5201.
27 EESA's overall goals included "preserv[ing] homeownership" and "maximiz[ing] overall
28 returns to the taxpayers of the United States." See 12 U.S.C. § 5201(2).
#:777
1 The United States District Court for the District of Minnesota reviewed and
2 summarized the HAMP program. See Williams v. Geithner, No. 09-1959, 2009 WL
3 3757380 (D. Minn. Nov. 9, 2009). As the Court there noted, the Treasury Guidelines
4 explain that “participating servicers are required to consider all eligible mortgage loans
5 unless prohibited by the rules of the applicable [pooling and servicing agreement] and/or
6 other investor servicing agreements.” Id. at *2 Therefore, although an applicant may
7 meet the threshold criteria, servicers need not modify a loan with a negative NPV or if
8 otherwise prohibited by the investor. Id. at *3.
9 The original servicer participation agreements between Aurora and Fannie Mae
10 do not provide any basis to conclude that borrowers like the Yaus have standing. The
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11 Yaus base their claim on two SPAs, one dated April 30, 2009, and the other an
12 amendment to the first SPA dated August 24, 2010. First, the April 2009 SPA itself
13 does not identify HAMP-eligible borrowers as intended third-party beneficiaries. (See
14 Compl. Ex. 1, p. 1 (identifying parties to the SPA)). Nor does the August 2010
15 agreement indicate any intent to benefit third parties. (Id. Ex. 2, p.1.)
16 Second, there is a presumption that borrowers like the Yaus are incidental
17 beneficiaries, a presumption they cannot overcome. "Parties that benefit from a
18 government contract are generally assumed to be incidental beneficiaries," rather than
19 intended ones, and "may not enforce the contract absent a clear intent to the contrary."
20 Klamath Water User Protective Ass'n v. Patterson, 204 F.3d 1206, 1211 (9th Cir. 2000)
21 (citing RESTATEMENT (SECOND) CONTRACTS § 313(2)). "Government contracts often
22 benefit the public, but the individual members of the public are treated as incidental
23 beneficiaries unless a different intention in manifested." Id. (citation omitted).
24 The Yaus have not met the difficult burden of showing a "clear intent" here. The
25 hurdle is not satisfied by a mere recitation of interested constituencies, Klamath, 204
26 F.3d at 1212, "[v]ague, hortatory pronouncements," id., "statement[s] of purpose," Smith
27 v. Cent. Ariz. Water Conservation Dist., 418 F.3d 1028, 1037 (9th Cir. 2005), "explicit
28 reference to a third party," Orff v. United States, 358 F.3d 1137, 1145 (9th Cir. 2004), or
#:778
1 even a showing that the contract "operates to the [third party's] benefit and was entered
2 into with [him] in mind." Id. at 1147. Rather, courts examine the "precise language for
3 the contract for a 'clear intent' to rebut the presumption that the [third parties] are merely
4 incidental beneficiaries." Id. at 1147 n.5.
5 There is no doubt that the SPAs attached to the complaint were entered into with
6 idea that certain qualified borrowers would be able to modify their loans, but nothing in
7 those contracts remotely evidences an intent to grant HAMP applicants the right to
8 enforce them. On the contrary, the only beneficiaries the contracts recognize are "the
9 parties to the Agreement." (Compl. Ex. 1, § 11(E); Ex. 2 § 11(E).) The Yaus cannot
10 overcome the strong presumption that they are incidental beneficiaries, without standing
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11 to enforce the contract.

12 Third, case law analyzing the same and similar SPAs establishes borrowers are
13 not intended third-party beneficiaries with the right to sue. Courts reach this result by
14 applying federal common law, which governs the construction of the SPA. (Compl. Ex.
15 1, § 11(A).) Federal common law also applies to the question of whether a party is an
16 intended beneficiary of a contract with the federal government. See County of Santa
17 Clara v. Astra, USA Inc., 588 F.3d 1237, 1243-44 (9th Cir. 2009); accord Grill, 2011
18 WL 127891, at *5. Under federal law, "before a third party can recover under a contract,
19 it must show that the contract was made for its direct benefit – that it is an intended
20 beneficiary of the contract." Klamath, 204 F.3d at 1210 (emphasis added; citation
21 omitted); see also Glass v. United States, 258 F.3d 1349, 1354 (Fed. Cir. 2001) (plaintiff
22 must "at least show that [the contract] was intended for his direct benefit") (emphasis in
23 original). For a non-party to be deemed an intended beneficiary, the language of the
24 contract must show that "the parties intended to grant [the third party] the right to
25 enforce the Agreement." Escobedo v. Countrywide Home Loans, Inc., No. 09cv1557,
26 2009 WL 4981618, at *3 (S.D. Cal Dec. 15, 2009); see also SEC v. Prudential Secs.,
27 Inc., 136 F.3d 153, 159 (D.C. Cir. 1998) (third party needed to demonstrate that the
28
#:779
1 contracting parties to a consent decree intended to allow the third party to enforce the
2 terms of the agreement).
3 The parties to the SPAs in question here–Aurora and Fannie Mae–did not intend
4 for borrowers to have standing to enforce the document. The SPAs specifically identify
5 the contemplated beneficiaries of the agreement, a recitation that does not include
6 borrowers. (See Compl. Ex. 4 § 11(E) ("The Agreement shall inure to the benefit of …
7 the parties to the Agreement and their permitted successors-in-interest.")).
8 In ascertaining whether parties to a contract intended to benefit a third party,
9 courts also "ask whether the beneficiary would be reasonable in relying on the promise
10 as manifesting an intention to confer a right on him or her." Klamath, 204 F.3d at 1211
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11 (citing RESTATEMENT (SECOND) CONTRACTS § 302(1)(b) cmt. d). A borrower would not
12 be reasonable in relying on the SPA to confer a right on him or her here. The SPA does
13 not require defendants to modify any particular loans. Instead, like other servicers that
14 entered into SPAs, Aurora retained considerable discretion over which loans to modify.
15 See, e.g., Williams, 2009 WL 3757380, at *6 (noting that servicers retain "broad
16 discretion" over the "calculation of the NPV" which drives which loans are modified).
17 The Yaus could not have reasonably relied on the SPAs to grant the right to a loan
18 modification; as such, they lack standing to enforce the SPA. See Escobedo, 2009 WL
19 4981618, at *3 ("A qualified borrower would not be reasonable in relying on the
20 Agreement as manifesting an intention to confer a right on him or her …).
21 The case law is almost uniform in holding that borrowers cannot sue participating
22 mortgage servicers on the theory they are intended beneficiaries under the HAMP
23 participation agreements. See Grill, 2011 WL 127891, at *6; Hoffman v. Bank of Am.,
24 N.A., No. C 10-2171, 2010 WL 2635773, at *3 (N.D. Cal. June 30, 2010) (collecting
25 cases); Marks v. Bank of Am., N.A., No. 3:10-cv-8039, 2010 WL 2572988, at *4-5 (D.
26 Ariz. June 22, 2010); Burtzos v. Countrywide Home Loans, No. 09-cv-2027, 2010 WL
27 2196068, at *2 (S.D.Cal. June 1, 2010); Benito v. Indymac Mortg. Servs., No. 2:09-CV-
28 1218-PMP-PAL, 2010 WL 2130648 (D. Nev. May 21, 2010); Escobedo, 2009 WL
#:780
1 4981618 (S.D. Cal Dec. 15, 2009); Mugica v. Aurora Loan Servs. LLC, No. SACV 09-
2 1086, 2009 WL 3467750, at *3 (C.D. Cal. Oct. 28, 2009); Kamp v. Aurora Loan Servs.
3 LLC, No. SACV 09-00844, 2009 WL 3177636, at *4 (C.D. Cal. Oct. 1, 2009) (argument
4 that borrowers have rights under HAMP participation agreements is "nonsensical and
5 baseless."). Courts outside the Ninth Circuit have also agreed. See Spelos v. BAC Home
6 Loans Servicing, L.P., No. 10-11503, 2010 WL 5174510 (D. Mass. Dec. 14, 2010);
7 Wells Fargo Bank v. Small, 2010 N.Y. Slip Op. 30424(U) 2010 WL 835462 (N.Y. Sup.
8 Ct. Feb. 16, 2010).
9 Defendants are only aware of two California cases holding that borrowers do have
10 standing to sue as intended beneficiaries: Reyes v. Saxon Mortgage Servs. Inc., No.
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11 09cv1366, 2009 WL 3738177 (S.D. Cal. Nov. 5, 2009) (Sabraw, J.) and Marques v.
12 Wells Fargo Home Mortg., Inc., No. 09-cv-1985, 2010 WL 3212131 (S.D. Cal. Aug. 12,
13 2010). However, Reyes is not even persuasive to the judge who decided it; earlier this
14 year, after reviewing the decision in Escobedo, the same judge who had decided Reyes
15 held that borrowers were not third-party beneficiaries under HAMP. See Villa v. Wells
16 Fargo Bank, N.A., 2010 WL 935680 (S.D. Cal. March 15, 2010) (Sabraw, J.). And the
17 holding of Marques was explicitly rejected by the only courts to cite it. See Grill, 2011
18 WL 127891, at *7; Orcilla v. Bank of Am., N.A., No. C10-3931, 2010 WL 5211507, at
19 *3 (N.D. Cal. Dec. 16, 2010); Hammonds v. Aurora Loan Servs. LLC, No. EDCV 10-
20 1025, 2010 WL 3859069, at *2-3 (C.D. Cal. Sept. 27, 2010.)
21 These cases, from California and other federal courts, and from one state court,
22 are persuasive, and consistent with principles for determining third-party beneficiary
23 status under federal common law. This Court should follow these decisions and deny
24 the Yaus the right to enforce the SPAs as third-party beneficiaries. Absent an ability to
25 invoke third-party beneficiary status, the second cause of action must also fail.
26 E. No Specific Performance (Third Cause of Action)
27 By their claim, plaintiffs seek specific performance of the contract which they
28 annexed as Exhibit 3 to the complaint. The third cause of action should be dismissed
#:781
1 because it is wholly derivative of the baseless contract claims. Specific performance is a

2 remedy for breach of contract, not a cause of action in itself as this complaint presents it.
3 See, e.g., Golden West Baseball Co. v. City of Anaheim, 25 Cal. App. 4th 11, 49, 31 Cal.
4 Rptr. 2d 378 (Cal. Ct. App. 1994); Harara v. ConocoPhillips Co., 377 F. Supp. 2d 779,
5 796 n. 20 (N.D. Cal. 2005) ("Specific performance is a form of contractual relief, not an
6 independent claim."). This claim should be dismissed.
7 F. No Unjust Enrichment (Fourth Cause of Action)
8 The Yaus' next theory of recovery is a convoluted claim that "defendants" have
9 been unjustly enriched by receiving payments from plaintiffs after the notice of default
10 was filed. (Compl. ¶ 172(a).) The Yaus raise irrelevant issues. Unjust enrichment is not
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11 a free-standing cause of action. Even if it were, the reality is, plaintiffs owed money on
12 their mortgage, but have not made all the payments required under the note and deed of
13 trust. (Compl. Ex. 6 at 3.) Thus neither the owner of the Yaus’ loan (the trust for which
14 Deutsche Bank acts as trustee only) nor the servicer (Aurora) has been unjustly enriched.
15 California courts have held that a claim of unjust enrichment should be dismissed
16 because it is “not a cause of action” but a “general principle underlying various doctrines
17 and remedies, including quasi-contract.” Jogani v. Superior Court, 165 Cal.App.4th 901,
18 911 (2008); see Levine v. Blue Shield of Cal., 189 Cal.App.4th 1117, 1138 (2010)
19 (affirming superior court that sustained demurrer to unjust enrichment because it is not a
20 cause of action); MB Techs, Inc. v. Oracle Corp., No. C 09-5988, 2010 WL 1576686, at
21 *4 (N.D. Cal. April 19, 2010) (collecting California cases allowing and disallowing an
22 unjust enrichment “cause of action” and concluding the better view is to dismiss it as a
23 separate cause of action).
24 Even if the Court reaches the merits of the claim, here it must fail. The Yaus'
25 theory of unjust enrichment is that they were induced to make payments under the
26 HAMP trial modification plan based on a belief that it would lead to a final
27 modification. Other courts have rejected the application of unjust enrichment to such a
28 fact scenario. In the recently-decided case Reyes v. Wells Fargo Bank, N.A., No. C 10-
#:782
1 1667 JCS, 2011 WL 30759 (N.D. Cal. Jan. 3, 2011), the plaintiffs alleged they had been
2 misled into signing a forbearance agreement by the false promise that they would be
3 given an opportunity to save their home. After analyzing the interplay of the unjust
4 enrichment doctrine with the remedy of restitution, the Court held the allegations did not
5 suffice. Id. at *17-18. The Court concluded that even if plaintiffs had been misled into
6 making payments they would not otherwise have made, the defendant had not been
7 enriched unjustly because the plaintiffs owed that money under the note and deed of
8 trust. Id. at *18 (citing Cal. Civil Code § 2224). In this case, Aurora had a right as
9 servicer to receive the Yaus' payment on behalf of the trust. The HAMP trial payments
10 did not bring the loan current under the original loan documents; therefore, defendants
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11 have not only not been unjustly enriched, they have not even received the benefit of the
12 original bargain.
13 To the extent the Yaus contend unjust enrichment was in the form of money
14 received from the federal government for participation in HAMP, such a claim of unjust
15 enrichment is not viable. Because there is no right to sue recipients of TARP funds or
16 HAMP participants, an unjust enrichment cause of action based on such involvement is
17 improper. See Aleem v. Bank of Am., N.A., No. EDCV 09-1812 VAP, 2010 WL
18 532330, at *3 (C.D. Cal. Feb. 9, 2010) (dismissing unjust enrichment cause of action
19 premised on receipt of TARP funds because no private right of action exists under that
20 law). The fourth cause of action should be dismissed.
21 G. No Unfair Competition Law Claim (Fifth Cause of Action)
22 The complaint next contends defendants have violated Cal. Bus. & Prof. Code §
23 17200, et seq. (the Unfair Competition Law or UCL), which makes actionable any
24 "unlawful, unfair or fraudulent business practice." In proscribing any "unlawful"
25 business practice, Section 17200 borrows violations of other laws and treats them as
26 unlawful practices that are actionable as unfair competition. See Cel-Tech Comm. v.
27 L.A. Cellular Tel. Co., 20 Cal.4th 163, 180 (1999). Facts supporting a Section 17200
28 claim must be pled with reasonable particularity. See Khoury v. Maly’s of Cal., 14
#:783
1 Cal.App.4th 612, 619 (1993); accord Benham v. Aurora Loan Serv., No. C-09-2059,
2 2009 WL 2880232, at *4 (N.D. Cal. 2009) (applying reasonable particularity standard to
3 UCL claim in federal court). A plaintiff must have suffered personal injury-in-fact and
4 lost money or property as a result of the illegal act. See Bus. & Prof. Code, § 17204.
5 California's unfair competition statutes establish three forms of unfair
6 competition: (1) unlawful, (2) unfair, or (3) deceptive or fraudulent. See Cel-Tech
7 Comm. 20 Cal.4th at 180. A business practice is “unlawful” if it is “forbidden by law.”
8 Walker v. Countrywide Home Loans, 98 Cal.App.4th 1158, 1169 (2002). A business
9 practice is unfair within the meaning of the UCL if it violates established public policy
10 or if it is immoral, unethical, oppressive, or unscrupulous and causes injury to consumers
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11 that outweigh its benefits. See id. at 1170. To show a business practice is deceptive, a
12 plaintiff must show members of the public are likely to be deceived. See id. at 1170.
13 The cut-and-paste allegations of this UCL claim fail to state any basis for relief.
14 Plaintiffs allege "defendants"—without distinguishing between Aurora and Deutsche
15 Bank—have a pattern and practice of (a) applying payment to late charges and fees in
16 violation of HAMP, (b) "padding the loan" with unnecessary charges, (c) demanding
17 post default payments while "keeping them in foreclosure", (d) refusing to provide
18 permanent loan modifications to borrowers in HAMP plans whose loans were covered
19 by CDS or insurance, (e) refusing to give HAMP modifications to borrowers who were
20 not in default, (f) breaching contracts, (g) sending false letters about special forbearance
21 agreements, (h) falsely representing that the HAMP program may allow borrowers to
22 modify their loans, (i) violating the "Security First Rule" of Code of Civil Procedure §
23 726, and (j) violating laws related to foreclosure prevention, deficiency judgments, and
24 the rights of contracting parties. (Compl. ¶ 180). There are, for all practical purposes,
25 no allegations of fact in the complaint related to any of these claims. Certainly, there are
26 none related to the Yaus. The complaint does not identify what payments were
27 misapplied, nor what rule of HAMP such an application violated. It does not explain
28 what fees were padded, nor why Aurora could not accept payments under the HAMP
#:784
1 trial plan without dismissing the foreclosure. The fact is many borrowers have modified
2 loans, with Aurora, through HAMP, as is a matter of public record. (RJN Ex. 6.)2
3 Plaintiffs do not offer any factual allegations to support their contention that Aurora (or
4 Deutsche Bank) systematically violates HAMP provisions. This falls short of the
5 Twombly/Iqbal pleading standard, and far short of the "reasonable particularity" standard
6 applicable to UCL claims.
7 The complaint tries to give a veneer of legal specificity to some of its allegations
8 by citing Code of Civil Procedure § 726 and California's anti-deficiency laws. (Compl.
9 ¶ 180(j)-(k).) Section 726 is an election-of-remedies statute, which provides that a
10 creditor must foreclose a security interest before bringing an action against the obligor of
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11 a secured debt, and that by suing without foreclosing, the creditor elects a remedy other
12 than foreclosure. See id.; In re Madigan, 122 B.R. 103, 105 (B.A.P. 9th Cir. 1991).
13 Here, neither Aurora nor Deutsche Bank has sued the Yaus. The law simply does not
14 apply. The contention that deficiency judgments are unavailable is true but irrelevant.
15 Finally, to the extent the UCL claim is based on Aurora's obligation to take
16 particular actions in servicing the loan, or its failure to disclose certain facts, it is
17 preempted. See Section IV(A), supra, of this memorandum. It is well-settled that UCL
18 claims are preempted by HOLA when applying the UCL would function as a state law
19 regulation on a national savings association's mortgage lending or servicing activities.
20 E.g., Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1004 (9th Cir. 2008); Lee v. U.S.
21 Bank, N.A., No. C 10-1434, 2010 WL 2635777, at *8-9 (N.D. Cal. June 30, 2010).
22 The fifth cause of action should be dismissed.
23 H. No Fraudulent Concealment (Sixth Cause of Action)
24 The sixth cause of action contends defendants fraudulently concealed material
25 facts. This allegation is both ill-conceived as to the elements and improperly vague.
26
2
27 This report is prepared and published by the federal Making Home Affordable
program. It can be found at http://www.makinghomeaffordable.gov, and is subject to
28 judicial notice as a document from a government agency website.
#:785
1 Under California law, the elements of common law fraud are "misrepresentation,
2 knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damages."
3 Gil v. Bank of Am., Nat'l Ass'n, 138 Cal.App.4th 1371, 1381 (2006). Fraudulent
4 concealment is substantially the same as fraudulent misrepresentation except it involves
5 the non-disclosure of pertinent information, rather than an affirmative misrepresentation.
6 See Marketing West, Inc. v. Sanyo Fisher (USA) Corp., 6 Cal.App.4th 603, 612 (1992).
7 To properly allege fraud, a plaintiff must state facts in support with particularity.
8 The pertinent rule reads, "[i]n alleging fraud or mistake, a party must state with
9 particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). The
10 particularity requirement of Rule 9(b) is designed to "give defendants notice of the
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11 particular misconduct which is alleged to constitute the fraud charged so that they can
12 defend against the charge and not just deny that they have done anything wrong."
13 Neubronner v. Milken, 6 F.3d 666, 671 (9th Cir. 1993). To be sufficient, a plaintiff
14 should allege the time, place and manner of the alleged fraudulent activities. See Moore
15 v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989); see also Cooper v.
16 Pickett, 137 F.3d 616, 627 (9th Cir. 1997) (fraud allegations should include the "who,
17 what, where, when and how"). Generally, the complaint must attribute particular
18 fraudulent statements or acts to individual defendants. See Moore, 885 F.2d at 540.
19 Where, as here, the plaintiff alleges only corporate fraud, the plaintiff "should include
20 the misrepresentations themselves with particularity and, where possible, the roles of the
21 individual defendants in the misrepresentations." Id. at 540.
22 The sixth claim alleges Aurora and Deutsche Bank concealed that Deutsche Bank
23 was the owner of the loan, that the loans were covered by CDS and that some loans
24 would fail the NPV test due to CDS and insurance. (Compl. ¶ 186(l)-(n).) This does
25 not state a claim for relief because one can only fraudulently conceal a fact when he is
26 under an obligation to disclose it. See Marketing West, Inc., 6 Cal. App. 4th at 613.
27 Here there was no such obligation. Indeed the allegation is frivolous because the deed of
28 trust itself explains the loan may be sold without notice to plaintiffs. (RJN Ex. 1 ¶ 20).
#:786
1 The complaint does not identify any obligation by each defendant to disclose to
2 the Yaus that Deutsche Bank owned the loan. In fact, it claims a trust did. Even if it
3 could identify one, it does not provide any explanation about how the failure to identify
4 Deutsche Bank caused the Yaus to take any action to their detriment. Similarly, the
5 Yaus cannot show defendants had to disclose that the loan were "covered" by CDS, nor
6 how the NPV test would be calculated for any given loan.
7 These allegations also ignore the essential elements of a fraud claim. The Yaus
8 have not shown how they relied to their detriment on any concealment of facts. After
9 defaulting on loan payments, all the Yaus did was sign a HAMP trial plan through which
10 they made payments to Aurora on the Loan. As discussed above, the Yaus were already
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11 obligated to make those payments, so they suffered no legally cognizable harm by

12 making payments on the Loan.

13 Finally, this claim is preempted against Aurora under HOLA because California
14 state law cannot mandate that Aurora make any particular disclosures about a loan. The
15 Truth-in-Lending Act would also serve to preempt any state law claims requiring
16 additional loan disclosures to borrowers. See 15 U.S.C. § 1610.
17 Fraudulent concealment claims on this theory must be dismissed as preempted.
18 I. No Fraudulent Inducement (Seventh Cause of Action)
19 The seventh cause of action, although labeled a fraud claim, is in substance
20 another claim for breach of the HAMP contract. The Yaus claim they were
21 fraudulently-induced to enter into the HAMP trial plan, and then the April 2010 special
22 forbearance agreement, by a false promise that it would lead to a permanent
23 modification. (Compl. ¶¶ 201-204.) The words of the HAMP agreement and special
24 forbearance agreement contradict any such allegation.
25 The Yaus argue that to be entitled to a modification, they simply had to make the
26 payments as required. (Id. ¶ 204.) As discussed in section IV(C)(1), the HAMP
27 agreement is crystal clear that it does not guarantee a loan modification to any borrower.
28 (See Compl. Ex. 3.) The HAMP agreement also requires that documentation about a
#:787
1 borrower's finances be provided; simply making plan payments is not the only
2 requirement to progress to a final modification. (See id.)
3 Plaintiffs' claim of fraudulent inducement is even more misguided when one
4 considers the terms of the April 2010 special forbearance agreement. That document
5 explicitly states, "At the expiration date, a portion of the Arrearage will still be
6 outstanding. Because payment of the Plan payments will not cure the Arrearage,
7 Customer's account will remain delinquent. Upon the Expiration Date, Customer must
8 cure the Arrearage through a full reinstatement, payment in full, loan modification
9 agreement, or other loan workout option[.]" (Compl. Ex. 6, attachment A, ¶ B.) Failure
10 to cure the arrearage, the document warned, could lead to foreclosure. (Id.) Given these
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11 explicit warnings that no modification was assured, the Yaus cannot claim they
12 reasonably relied on a promise to modify their loans in either the HAMP trial plan or
13 special forbearance agreement.
14 In addition, for the reasons explained in sections IV(C)(2), supra, to allow this so-
15 called "fraud" claim, which is really a breach of contract allegation, in connection with
16 the HAMP trial plan would effectively allow a private right of action under that law.
17 One cannot create a style breach of HAMP agreement claim as common law allegations.
18 See Vida, 2010 WL 5148473, at *5. The seventh cause of action should be dismissed.
19 J. No Fraud and Deceit (Eighth Cause of Action)
20 The eighth cause of action claims Aurora and Deutsche Bank fraudulently induced
21 the Yaus to make payments after the foreclosure process had begun. (Compl. ¶ 213.) It
22 conflates two different concepts, and it certainly fails to state a viable fraud cause of
23 action. The complaint does not specify why it believes the Yaus did not have to make
24 any payments after the notice of default was filed. It appears, based on the reference to
25 anti-deficiency law, (see id. ¶ 180), the Yaus believe that if they had responded to the
26 notice of default by never paying another penny on the loan, there is nothing Deutsche
27 Bank or Aurora could do to compel them. That is true enough, as the anti-deficiency
28 statute, Code of Civil Procedure § 580d, would prohibit a first-lien creditor from
#:788
1 obtaining an enforceable judgment for the mortgage debt against the Yaus. This is not
2 the same however as extinguishing the obligation. The Yaus still owe the money, at
3 least in theory. California courts have recognized that a moral debt may persist. It even
4 has a legal effect in the context of quiet title actions, as that form of equitable relief has
5 been denied to debtors even when the underlying debt was no longer enforceable. See
6 Mix v. Sodd, 126 Cal. App. 3d 386, 390 (1981).
7 Therefore, it is simply wrong for the Yaus to claim they had no "continuing
8 obligation" to pay under the loan after foreclosure began. See Reyes v. Wells Fargo
9 Bank, N.A., 2011 WL 30759, at *18. Because the money they paid was owed, this claim
10 also fails for reasons similar to the other fraud claims, the absence of reasonable reliance
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11 causing legally-cognizable damages. Similarly, it fails to allege any actual

12 misrepresentations, since Aurora never promised, in either the HAMP trial plan or
13 special forbearance agreement, that mere payment of the plan payments would lead to a
14 loan modification. The eighth cause of action should be dismissed.
15 K. No Declaratory or Injunctive Relief (Ninth Cause of Action)
16 The ninth cause of action is an absurd claim that defendants cannot foreclose as to
17 Gloria Yau. declaratory relief is not an independent claim; rather, it is a form of relief.
18 See Gomez v. Wachovia Mortg. Corp., No. 09-2111, 2010 WL 291817, at *2 (N.D.
19 Cal. 2010) (citing Weiner v. Klais & Co., 108 F.3d 86, 92 (6th Cir. 1997). A plaintiff
20 is entitled to declaratory relief only after he or she establishes an actual claim. See
21 Avirez Ltd. v. Resolution Trust Co., 876 F. Supp. 1125, 1143 (C.D. Cal. 1995). This
22 “cause of action” also fails because injunctive relief is not an independent cause of
23 action. See Bellomi v. Countrywide Fin. Corp., No. 09-cv-3431, 2009 WL
24 3680500, at *2 (N.D. Cal. Oct. 30, 2009).
25 The other problem with the ninth cause of action is that it is substantively wrong.
26 Here, both Eddie Yau and Gloria Yau were trustors on the deed of trust and are therefore
27 bound by its terms. (RJN Ex. 1.) It is immaterial that Gloria Yau did not sign the note.
28 There has been a default on the obligation underlying the security instrument she signed,
#:789
1 meaning the foreclosure remedy of the deed of trust is available to the beneficiary. The
2 so-called ninth cause of action cannot withstand this motion to dismiss.
3 L. No Declaratory Relief (Tenth Cause of Action)
4 The tenth cause of action re-states the allegations of the first two contract causes
5 of action, in the form of a request for declaratory relief. The Yaus cannot show an
6 entitlement to such relief for the reasons set forth in sections IV(C)-(D), supra.
7 M. No Constructive Trust (Eleventh Cause of Action)
8 The last cause of action seeks a constructive trust. Civil Code § 2224 provides:
9 "One who gains a thing by fraud, accident, mistake, undue influence, the violation of a
10 trust, or other wrongful act, is, unless he or she has some other and better right thereto,
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11 an involuntary trustee of the thing gained, for the benefit of the person who would
12 otherwise have had it." To impose a constructive trust there must be: (1) a res (property
13 or some interest in property); (2) the right of the complaining party to that res; and (3) a
14 wrongful acquisition or detention of the res by another party. See Campbell v. Superior
15 Court, 132 Cal. App. 4th 904, 920 (2005).
16 Plaintiffs claim defendants are holding proceeds from CDS. (Compl. ¶ 234.)
17 Even if that is true, the complaint does not even try to allege facts showing how the Yaus
18 have a right to such funds; any CDS were private-party contracts that did not involve the
19 Yaus. The only thing any defendant has received from the Yaus is payments under the
20 note, HAMP trial plan, or special forbearance agreement. Defendants had a right to
21 receive such payments, and indeed to receive more than the Yaus actually paid. That is
22 why they now face foreclosure. Plaintiffs completely fail to set forth this claim.
23 N. Plaintiffs Failed To Assert Any Basis For Class Treatment or a Class Action
24 Plaintiffs, without any foundation, conclude the putative class action meets the
25 requirements of Fed. R. Civ. P. 23(b)(2) and 23(b)(3). It does not. Nor have plaintiffs
26 satisfied Local Rule 23-2.2.
27 As the parties seeking to establish a class, plaintiffs bear the burden of
28 demonstrating they have met all of the requirements of Fed. R. Civ. P. 23(a) and at least
#:790
1 one of the requirements of Fed. R. Civ. P. 23(b). See Ziner v. Accuflux Research Inst.,
2 Inc., 253 F.3d 1180, 1186 (9th Cir. 2001). Fed. R. Civ. P. 23(a) states four threshold
3 requirements applicable to all class actions (1) numerosity (a class so large that joinder is
4 impracticable); (2) commonality (questions of law or fact common to the entire class);
5 typicality (the named plaintiffs'' claims are typical of the entire class); and (4) adequacy
6 of representation (the named Plaintiff can adequately and fairly protect the interests of
7 the entire class). See AmChem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997).
8 Plaintiffs must provide facts to satisfy these requirements, and "[m]ere repetition of the
9 language of the Rule is inadequate." Doniger v. Pac. Nw. Bell Inc., 564 F.2d 1304, 1309
10 (9th Cir 1977) (cited authority omitted). In addition to the explicit requirements set out
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11 by Rule 23(a), the class definition must set forth a class which is ascertainable and
12 clearly identifiable.
13 Plaintiffs have failed to allege any of these elements, nor can they because of the
14 inherently individualized and unique circumstances of each borrower. Plaintiffs, and
15 other possible plaintiffs, do not share typical situations. “The purpose of the typicality
16 requirement is to assure that the interest of the named representative aligns with the
17 interests of the class.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992)
18 (cited authority omitted). “‘Typicality refers to the nature of the claim or defense of the
19 class representative, and not to the specific facts from which it arose or the relief
20 sought.’” Id. (quoted authority omitted). The test “‘is whether other members have the
21 same or similar injury, whether the action is based on conduct which is not unique to the
22 named plaintiffs, and whether other class members have been injured by the same course
23 of conduct.’” Id. (quoted authority omitted).
24 Plaintiffs’ class is defined by borrowers who negotiated different loan terms,
25 defaulted for different reasons, and purportedly were HAMP-eligible but were denied
26 modifications. Even if one were to ignore all the other issues and solely address the
27 HAMP issue as the Yaus do, they still fail to meet the typicality requirement. Some may
28 have vacated their properties, while others may only want a modification. Still others
#:791
1 may have qualified for a HAMP trial plan and failed to make payments thereunder.
2 They are no longer eligible. The possible scenarios are endless. The Yaus have been
3 offered a HAMP trial plan and, assuming they accept and comply in all respects with the
4 plan, the Yaus’ loan could and would be modified under HAMP. The Yaus could then
5 no longer serve as class action representatives because they would not be found to have
6 suffered injuries similar to the purported class. See, e.g., Doninger v. Pacific Northwest
7 Bell, Inc., 564 F.2d 1304, 1311 (9th Cir. 1977). ‘“[C]lass certification is inappropriate
8 where a putative class representative is subject to unique defenses which threaten to
9 become the focus of the litigation.” Hanon, 976 F.2d at 508.
10 Here, the harm, if any, to each plaintiff from allegedly not receiving a HAMP
modification would have to be litigated individually.3 Plaintiffs concede so, enumerating
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11
12 32 categories within each borrowers’ individual loan scenario that must be assessed.
13 (Compl. ¶¶ 139a-139ee.) Individual issues would overwhelm the sole common question.
14 To determine how each potential plaintiff's rights were actually affected by an
15 alleged failure to be given a HAMP modification, the Court would need to delve into
16 countless possible, individual fact patterns. For example:
17 • As a threshold matter, each plaintiff would need to show he or she was eligible for
HAMP;
18
• Then a plaintiff would need to show he or she applied for HAMP;
19
• Even if a plaintiff were able to show he or she was eligible for and applied for
20 HAMP, the next fact issue to be decided would be whether he or should could
have qualified for HAMP or any loan modification or other non-foreclosure
21 option. Again, without this showing, a plaintiff could not show any harm based
on an alleged failure to provide him or her with a loan workout or modification.
22 This showing, of course, is highly fact-specific, and such fact issues would be too
onerous to litigate in one class-action suit.
23
24
3
25 Class actions are not permitted in cases where diverse factual issues predominate over
common questions of law. See Grosz v. Boeing Co., 136 Fed. Appx. 960, 962, 2005
26 WL 1515070, at *1 (9th Cir. 2005); Gibbons v. Interbank Funding Group, 208 F.R.D.
278, 287 (N.D. Cal. 2002); Brown v. Regents of Univ. of California, 151 Cal.App.3d
27 982, 988-989 (1984); see City of San Jose v. Superior Court, 12 Cal.3d 447, 459 (1974)
("[A] class action cannot be maintained where each member's right to recover depends
28 on facts peculiar to his case ....").
#:792
• Next, to determine the harm caused by Aurora or Deutsche Bank’s alleged

1 wrongful conduct here, the Court would need to determine on a case-by-case
basis which of the possible non-foreclosure options each specific plaintiff may
2 have also sought before applying for HAMP. The harm would certainly be
different for each individual. These are individual, varying fact questions.
3
• Then, each plaintiff would need to show that they complied in all respects with the
4 HAMP trial plan, and that their oral representation of income matched the
documented income they provided, if they provided any at all. This too requires a
5 case-by-case review of each plaintiff's financial information, which would need to
occur before the plaintiffs in these categories could even claim to have suffered
6 any injury. This case-by-case review would be impracticable in a class-action
suit.
7
• Also, each plaintiff would need to show that the net present value test performed
8 under HAMP was improper or incorrect. Of course, this is not only individualized
to the person but also to the property.
9
10 Moreover, the reasons for HAMP denial are endless. For example, denials could
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11 have been due to excessive forbearance, net present value failure, change in financial
12 circumstances after the trial plan, and many others. To determine what (if any) harm
13 any specific borrower may have suffered so as to be in a position to seek any relief from
14 Aurora or Deutsche Bank, the Court would need to entertain, and then rule based on
15 countless fact scenarios. Because individual issues predominate, this case is simply not
16 suitable for class treatment and plaintiffs should not be able to treat it as such.
17 V. CONCLUSION
18 For the reasons set forth above, Aurora and Deutsche Bank respectfully request
19 the Court grant their motion to dismiss, with prejudice.
20 Dated: January 25, 2011 Respectfully submitted,
22 By: /s/ Justin D. Balser
23 JUSTIN D. BALSER
TODD A. BOOCK
24 VICTORIA E. EDWARDS
IMRAN HAYAT
25 Attorneys for Defendants
AURORA LOAN SERVICES LLC and
26 DEUTSCHE BANK TRUST COMPANY
AMERICAS, as trustee for Residential
27 Accredit Loans, Inc. Mortgage Asset-
Backed Pass-Through Certificates, Series
28 2007-QH9

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

1 AKERMAN SENTERFITT LLP

11 Attorneys for Defendants

AURORA LOAN SERVICES LLC and

1 TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD:

1 Dated: January 25, 2011 Respectfully submitted,

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

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

No. C-09-2059, 2009 WL 2880232 (N.D. Cal. Sept. 1, 2009)................................17

12 Benito v. Indymac Mortgage Servs.,

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

Haskett v. Villas at Desert Falls,

12 90 Cal.Ap.4th 864, , 108 Cal.Rptr.2d 888 (2001).......................................................4

Marketing West, Inc. v. Sanyo Fisher (USA) Corp.,

11 6 F.3d 666 (9th Cir. 1993)........................................................................................19

12 Orcilla v. Bank of Am., N.A.,

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

Ziner v. Accuflux Research Inst., Inc.,

12 253 F.3d 1180 (9th Cir. 2001)..................................................................................24

1 MEMORANDUM OF POINTS AND AUTHORITIES

11 “unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft, 129 S.Ct. at

12 1949. “[N]aked assertions devoid of further factual enhancement” no longer suffice to

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

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

11 560.2 to further Congress's goal of achieving a uniform set of regulations governing

(10) Processing, origination, servicing, sale or purchase of, or investment or

11 to enforce the contract.

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

11 obligated to make those payments, so they suffered no legally cognizable harm by

12 making payments on the Loan.

11 causing legally-cognizable damages. Similarly, it fails to allege any actual

• Next, to determine the harm caused by Aurora or Deutsche Bank’s alleged

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