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Santa Barbara, Ca. 93102
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Facsimile: (805) 966-9758
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Defendants.
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MEMORANDUM IN OPPOSITION TO MOTION TO DISMISS (MOD) .......... 2
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I. ARGUMENT.......................................................................... 2
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B. Tender Is Not A Requirement When It Would Be Inequitable
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To Do So......................................................................... 4
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C. Borrower Has A Private Right Against Lender For Failure
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To Modify Loan ............................................................... 6
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Fair Dealing Is Proper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 7
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E. Claim For Equitable And Injunctive Relief Is Properly Averred ........ 9
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F. Elements Of Fraud Are Properly Plead ..................................... 10
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G. A Present And Actual Controversy Exists Between Defendant
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H. A Present And Actual Controversy Exists Between·
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Defendant And Plaintiff Requiring A Judicial Declaration .............. 12
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II. CONCLUSION....................................................................... 13
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1 TABLE OF AUTHORITIES
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3 Case Authorities Page
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5 Abdullah v. United Sav. Bank, 43 Cal.App.4th 1101, 1009 (1996) 12
6 Argabright v. United States, 35 F.3d 1476, 1479 (9th Cir. 1996) 2
7 Arnolds Management Corp. v. Eischen, 158 Cal.App.3d 575 (1984) 4
8 Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988) 2
9 Barker v. Riverside County Office ofEducation, 4
10 584 F.3d 821, 824 (9th Cir. 2009)
11 Baypoint Mortgage Corp. v. Crest Premium Real Estate etc., Trust 13
12 (1985) 168 Cal.App.3d 818 [214 Cal. Rptr.3d 531]
13 Bisno v. Sax (1959) 175 CaLApp2d 714 [346 P2.d .S14J 13
14 California State Restaurant Assoc. v. Willow 7
15 (1976) 129 Cal. Rptr. 824, 58 CA. 3d 340
16 Caravantes v. California Reconveyance Co., 2010 WL 4055560, 13
17 Carma Developers, Inc. v. Marathon Development California, Inc. 8
18 (1992) 2 Cal.4lh 342,371-372
19 City ofCotati v. Cashman (2002) 29 Cal.4th 69, 79 11
20 Clegg v. Cult Awareness Network, 18 F.3d 752 (9th Cir, 1994) 2
21 Coles Dept. Store v. First Bank (N.A.)-Billings, 240 Mont. 226 9
22 Connors v. Home Loan Corp., 2009 WL 1615989 from San Diego 6, 7
23 Darensburg v. Metropolitan Transp. Comm'n, 13
24 2006 WL 167657, at 2 (N.D. Cal. Jan.20, 2006).
25 Disabled and Blind Action Committee ofCalifornia v. Jenkins 7
26 (1974) 44 C.A.3d 74
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Egan v. Mutual o/Omaha Ins. Co., supra, 24 Cal.3d at p. 818 8
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Farmers v. Countrywide Home Loans, 6, 7
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Garcia v. Ocwen Loan Servicing, LLC, 12
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2010 WL 1881098 (N.D.Cal.)
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GoTo.com, Inc. v. The Walt Disney Co., 9, 10
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202 F.3d 1199, 1210 (9th Cir. 2000)
10 Housley v. US. (9th Cir. Nev. 1994) 35 F.3d 400, 401 2,3
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Humboldt Say. Bankv. McCleverty, 161 Cal. 285, 291, 119 P. 82 (1911) 6
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Karlsen v. Am. Say. & Loan Ass'n, 15 Cal. App.3d 112 (1971) 4, 12
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Kingv. California, 784 F.2d 910,913 (9th Cir. 1986) 2
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Los Angeles Equestrian Ctr., Inc. v. City o/Lose Angeles, 8
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Mabry v. Superior Court, 185 Cal. App. 4th 208,226 (July 2010) 6,7
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Marsu, B. V. v. Walt Disney Co. (9h Cir) 185 F.3d 932 8
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Mayfield v. Vanguard Say. & Loan Ass'n, 5
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710 F.Supp. 143, 149 (E.D. Pa 1989)
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Nichols v. Deutsche Bank National Trust Company, 10
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2007 US. Dist. LEXIS 86223
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Paul v. Howard University, 9
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754 A.2d 297, 145 Ed. Law Rep. 702 (D.C. 2000)
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720 F.2d 578, 581 (9th Cir. 1983)
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14 I. ARGUMENT
15 A. Complaint Has Probable Validity In Proving Facts.
16 A complaint should not be dismissed "unless it appears beyond doubt that the plain
17 tiff can prove no set of facts in support of her claim which would entitle her to relief."
18 Housleyv. U.S. (9th Cir. Nev. 1994) 35 F.3d 400,401. "All allegations of material fact in
19 the complaint are taken as true and construed in the light most favorable to plaintiff." Ar
20 gabright v. United States, 35 F.3d 1476, 1479 (9th Cir. 1996). The Complaint includes a
21 "short, plain statement, of the basis for relief." Fed. Rule Civ. Proc. 8(a). The Complaint
22 contains cognizable legal theories, sufficient facts to support cognizable legal theories, and
23 seeks remedies to which plaintiff is entitled. Balistreri v. Pacifica Police Dept., 901 F.2d
24 696, 699 (9th Cir. 1988); King v. California, 784 F.2d 910, 913 (9th Cir. 1986). Moreover,
25 the legal conclusions in the Complaint can and should be drawn from the facts alleged,
26 and, in tum, the court should accept those conclusions. Clegg v. Cult Awareness Network,
27 18 F.3d 752 (9th Cir, 1994).
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13 "21. Plaintiff is informed and believes and therefore alleges that after her loan was origi
14 nated and funded, was sold on multiple occasions, bundled into a group of Trust Deeds and
16 therefore none of these defendants, and each of them, owned this loan, or Note and cannot
17 be and are not the Beneficiary, or lawfully appointed trustee, and have no right to declare a
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default, to cause notices of default to issue or to be recorded, or to foreclose on Plaintiffs
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interest in the subject property, Defendants, and each of them, were not the note Holder or
20 the Note holder in due course or any Beneficiary at any time in regards to this loan"
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"151. Plaintiff alleges that Defendants, and each of them, presented a loan to Plaintiff
22 whereby Defendants represented that she did qualify for ordinary underwriting, and that
the loan was within Plaintiffs personal financial needs and limitations given the confiden
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tial financial information that Plaintiff shared with Defendants, however, the truth is that
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the loan payments exceeded Plaintiff established income."
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BANA wants to take real property without offering any proof showing that it is the
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owner of property and whether it still holds a beneficial interest in the promissory note. It
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is no wonder that all those lawsuits are beginning to look so much alike. If it is unclear
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11 The Complaint alleges that BANA cannot prove it is authorized to take her home, and
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file a Notice of Trustee's Sale and evict a homeowner. If a lack of resources to tender the
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outstanding balance on the loan prevented the homeowner from having her day in court,
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that fact would hardly prove that the BANA has a legitimate claim. Mabry is correct: a re
quirement of tender defeats the purpose of the statute.
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Even if an explicit offer of tender is required, Plaintiff could not offer tender be
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cause Defendants' actions precluded her from doing so. Tender of the amount owed typi
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cally is a condition precedent. Rosenthal v. Great Western Fin. Securities Corp., 14 Cal.
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4th, 394, 415 (1996). Notwithstanding, it would be inequitable to apply the "tender rule" in
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this matter. Specifically, the Rosenthal line of cases are factually inapposite to the case at
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bar because in the Rosenthal line of cases defendants' own actions did not preclude plain
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14 loan transaction).
15 The identity of the owner of the property is the core issue in this case. Plaintiffs
16 pre-Discovery inquiries indicate that Freddie Mac rather than BANA is the owner of the
17 loan. BANA did not own the loan at the time she filed her complaint; therefore, BANA is
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not the mortgagee. This issue cannot be brushed aside on the pretense that California is a
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non-judicial foreclosure state. Non-judicial does not mean outlaw. If BANA is not the
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mortgagee, it would be unjust to dismiss the complaint and allow BANA to seize Plaintiffs
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home. She has a grant deed. She was ready, willing and able to resume monthly payments
to the owner of the note. Is BANA legally entitled to repayment of these funds from Plain
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23 tiff? BANA must produce the original promissory note and show that BANA is the benefi
ciary of the note, or that it is acting on behalf of the beneficiary with the beneficiary's
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permission. Plaintiff is informed and believes that BANA cannot produce the necessary
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instruments. She will show at trial that the promissory note was bundled into a presold
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"Trust" which was then securitized and offered for investment many times over. In other
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words, the note was "atomized" and no longer exists as an enforceable mortgage docu
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15 as a prerequisite to filing suit, since that would defeat the purpose of the statute. Under the
16 court's narrow construction of the statute, §2923.5 merely adds a procedural step in the
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foreclosure process. Since the statute is not substantive, it is not preempted by federal law.
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The declaration specified in §2923.5 does not have to be signed under penalty of perjury,
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and if the notice is defective, the borrower's remedy is limited to getting a postponement
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of a foreclosure while the lender files a new notice of default that complies with §2923.5.
The unauthenticated Notice of Default as Exhibit D does not comply with § 2923.5.
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Defendant is confused when it states that Section 2923.6 does not require an offer
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of a loan modification, nor does any statute create a private right of action for borrowers to
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modifY the terms of the loans. Indeed, this is not the case. There are some federal cases
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which support Defendants' position. Farmers v. Countrywide Home Loans, 2009 WL
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189025 (S.D.Cal., 2009), and Connors v. Home Loan Corp., 2009 WL 1615989 from San
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Diego. Yet the reasoning of these cases is impaired because they reach an irrelevant con
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clusion from a faulty premise. Connors, in particular, is seriously flawed. Both Farmers
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12 statute. A private right of action is the only reasonable method of enforcement of the stat
13 ute. It is difficult to imagine that the California Legislature did not intend a private right of
14 action for borrowers. Such a judicial proclamation, without clear legislative intent to sup
15 port it, renders the statute toothless. It cannot be what the legislature had intended See SB
16 1137, Section 1, subd. (g).and Mabry v. Superior Court, 185 Cal. App. 4th 208, 226 (July
17 2010)
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Thus a private right of action exists under Section 2923.6. Alternatively, as Plain
19 tiffs claims for relief are only based on violations of Sections 2923.5 and 2923.6 and are
20 not direct actions under either statute, the analysis is irrelevant. Accordingly, Plaintiffs
21 allegations and claims for relief based on Defendant's violations of Sections 2923.5 and
22 2923.6 are supported by the pleadings.
23 D. Claim Of Breach Implied Covenant Of Good Faith And Fair Dealing Is Proper.
Defendants essentially argue that they cannot be held liable for any acts of the other
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Defendants because it had no duty or relationship with the Plaintiff. However, Defendant's
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argument ignores the allegations of Plaintiff complaint and governing law regarding civil
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conspiracy and joint ventures as set forth in the complaint.
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every contract imposes upon each party a duty of good faith and fair dealing in its per
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formance and its enforcement. Carma Developers, Inc. v. Marathon Development Califor
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nia, Inc. (1992) 2 Cal.4th 342, 371-372
5 Plaintiff properly pled Defendants violated the breach of implied covenant of good
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faith and fair dealing. "Every contract imposes upon each party a duty of good faith and
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fair dealing in its performance and its enforcement." Carma Developers Inc. v. Marathon
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Dev. Cal., Inc., 2 Cal.4th 342, 371, 6 Cal.Rptr.2d 467, 826 P.2d 710 (1992) (quoting Re
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statement (Second) of Contracts § 205). "The covenant of good faith finds particular appli
10 cation in situations where one party is invested with a discretionary power affecting the
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rights of another. Such power must be exercised in good faith." See Marsu, B. V. v. Walt
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Disney Co. (9th Cir) 185 F.3d 932. The Implied covenant of good faith and fair dealing is
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an equitable doctrine which may validate otherwise unenforceable agreements. It is a doc
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trine of equity that the courts may use to achieve a just result when a contract (example:
15 the loan modification trial plan agreement) is unclear regarding a party's obligations and
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the doctrine can then allow the court to enforce what might otherwise be deemed an unen
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forceable agreement.
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The implied promise requires each contracting party to refrain from doing anything
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to injure the right of the other to receive the benefits of the agreement Egan v. Mutual of
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Omaha Ins. Co., supra, 24 Ca1.3d at p. 818, 169 Cal. Rptr. 691, 620 P.2d 141. "[T]he
covenant is implied to prevent a contracting party from engaging in conduct which (while
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not technically transgressing the express covenant) frustrates the other party's rights of the
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benefits of the contract." See Los Angeles Equestrian Ctr., Inc. v. City ofLose Angeles, 17
Cal.AppAth 434, 447, 21 Cal.Rptr.2d 313 (1993). Even where a defendant is given abso
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lute discretion, it must exercise that discretion in good faith. See Travellers Intern., A. G. v.
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Trans World Airlines, Inc., 41 F.3d 1570 (2d Cir. 1994) . Thus, a party who "evades the
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spirit ofthe contract," willfully renders imperfect performance, or interferes with perform
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ance by the other party, may be liable for breach of the implied covenant of good faith and
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12 harm as a matter of law, thus establishing that portion of the TRO requirement. Wheat v.
13 Thomas, 209 Cal. 306 (1930); C.C.P. § 3387. As a practical matter, Plaintiff cannot re
14 place her house; if the Trustee's Sale is made to a bona fide purchaser, she will lose this
15 unique property she has made so many sacrifices to keep. Plaintiff successfully supports
16 her claim for injunctive relief.
17 F. Elements Of Fraud Are Properly Pleaded.
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Under California law, the elements of common law fraud are "misrepresentation,
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knowledge of its falsity, intent to defraud, justifiable reliance and resulting damage." Gil v.
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Bank ofAm., NA., 42 Cal. Rptr. 3d 310, 317 (Cal Ct. App. 2006). Common law claims of
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fraud must be pled with sufficient particularity. See Fed. R. Civ. P. 9(b) ("In alleging fraud
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or mistake, a party must state with particularity the circumstances constituting fraud or
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mistake."). Therefore, in addition to the "time, place and content of an alleged misrepre
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sentation," a complaint "must set forth what is false or misleading about a statement, and
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... an explanation as to why the statement or omission complained of was false or mislead
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ing." Yourish v. Cal. Amplifier, 191 F.3d 983, 993 & n.10 (9th Cir. 1999) (citations omit
27 ted). It is clear that Plaintiff has pled the circumstances of the alleged fraud with sufficient
28 particularity. The allegations of the Complaint are specific enough to meet the heightened
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G. A Present And Actual Controversy Exists Between Defendant And Plaintiff Re
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quiring A Judicial Declaration.
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Defendants focus only on one aspect of Plaintiffs complaint and neglect to mention
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all allegations clearly outlined in Plaintiff s Complaint. Contrary to the argument of De
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fendants, the request for declaratory relief states an independent claim. If Defendant had
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read the Complaint in its entirety, it would have become clear that although Plaintiff has
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incorporated many of the allegations in her request for a judicial declaration, her allega
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tions for declaratory relief include paragraph 173: "These disputes concern but are not lim
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ited to the ownership rights and the validity of the commencement of the foreclosure proc
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ess." Paragraph 175 of the Complaint continues to state: "Plaintiff further alleges that a
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declaration of rights and duties of the parties herein are essential to determine the actual
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status and validity of the loan... " Contrary to Defendant's claims, Plaintiff successfully
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bases her request for declaratory relief upon multiple violations committed against her dur
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ing the loan origination process and not merely on other complaints upon which Defendant
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applies focus and attention.
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A complete reading of Plaintiffs Complaint shows that Plaintiff "specifically al
28 leged the existence of an actual, present controversy between the parties with respect to the
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foreclosure sale. See Abdallah v. United Sav. Bank, 43 Cal.App.4th 1101, 1009 (1996);
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Karlsen v. American Sav. & Loan Assn., 15 Cal.App.3d 112, 117, 92 Cal.Rptr. 851 (1971).
15 In compliance with Rule 8, Plaintiff has alleged facts indicating why Defendants' foreclo
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sure was wrongful. Plaintiff has also based her wrongful foreclosure action on the basis of
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California Civil Code §2923.5. As set forth in Plaintiffs Objection to Judicial Notice, Re
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con Trust does not have the authority to foreclose under the deed of trust because of the
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LLC, 2010 WL 1881098 (N.D.Cal.) (Denying motion to dismiss claim against loan ser
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vicer and holding that servicer owed borrower a duty of care). Specifically, the servicing of
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There was a clear foreseeability of harm to Bernice Jacobs as she could lose her
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home. Moreover, the loss of Plaintiff's home would be a proximate cause of the Defen
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dants' breach of their duty of care. The Defendants wrongfully recorded a notice of de
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fault on the property. Also, moral blame must be attached to the Defendants' conduct as
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they knowingly recorded the default even though they knew that they that they did not
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The irregularities in this transaction between Plaintiff and BANA question the basic
issue of whether BANA has the standing to enforce the rights associated with the deed of
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22 trust. See Stephen R. Buchenroth and Gretchen D. Jeffries, Recent Foreclosure Cases:
23 Lenders Beware (June 2007); Wells Fargo v. Jordan, 914 N.E.2d 204 (Ohio 2009) ("If
plaintiff has offered no evidence that it owned the note and mortgage when the complaint
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was filed, it would not be entitled to judgment as a matter of law."); Christopher Lewis Pe
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terson, Foreclosure Subprime Mortgage Lending, and the Mortgage Electronic Registra
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tion System, University of Cincinnati Law Review, Vol. 78, No.4, at 1368-1371 (Summer
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4 III. CONCLUSION:
5 There is clearly a significant and deep-reaching controversy brewing between the
6 parties and a pressing need for a judicial determination of the parties' rights and duties
7 concerning the validity of the Promissory Note and Deed of Trust and Defendants' rights
8 in the Property. The Defendants' use of fraudulent documents has affected determinations
9 regarding the foreclosure on Plaintiffs property. For the reasons stated above, this Court
10 should deny the motion to dismiss Plaintiff's Complaint and permit her to develop the evi
11 dence necessary to vindicate her claims and obtain damages for the wrongs committed
12 against her.
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