Chalgren et al v. Deutsche Bank National Trust Company et al

OCR transcription for search; preserved printed pages are authoritative

Entered on Docket
October 07, 2011

GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA

DEUTSCHE BANK NATIONAL TRUST
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20 MEMORANDUM DECISION ON MOTIONS TO DISMISS
21 Before this Court are two motions to dismiss the First Amended

22 || Complaint of debtors Richard Scott Chalgren and Karen Chalgren
23 || (“Plaintiffs”). For the following reasons, this Court grants

24 | Defendants’ motions with leave to amend with regard to the first,
25} second, third, and sixth causes of action. This Court denies

26 || Defendants’ motions to dismiss with regard to the fifth cause of
27 || action and grants the motions in part with regard to the fourth

28 | cause of action.

oe Maud DASGEROPION Filed: 10/07/11 Entered: 10/07/11 15:08:16 Page 1of
MATION = MOTIONS TO DISMISS 19

UNITED STATES BANKRUPTCY COURT

For The Northern District Of California

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This Memorandum Decision constitutes the Court’s findings of
fact and conclusions of law, pursuant to Rule 7052 of the Federal
Rules of Bankruptcy Procedure.

A. PROCEDURAL HISTORY

Plaintiffs initiated this adversary proceeding on February 25,
2010. On July 27, 2010, defendants American Home Mortgage Corp.
d/b/a American Brokers Conduit and AHM SV, Inc. f/k/a American Home
Mortgage Servicing, Inc. filed a Suggestion of Bankruptcy in this
adversary proceeding. Prior motions to dismiss were granted in
part and denied in part at a hearing on September 20, 2010.
Plaintiffs filed an amended complaint on November 2, 2010 (“First
Amended Complaint”). The First Amended Complaint alleges six
causes of action. The first cause of action is for violation of
California Civil Code section 2923.5. The second cause of action
is for violation of Real Estate Settlement Procedures Act,

12 U.S.C. §§ 2601-2617 (“RESPA”). The third cause of action is for
violation of the automatic stay of the Bankruptcy Code. The fourth
cause of action is for declaratory relief. The fifth cause of
action is for injunctive relief. The sixth cause of action is for
cancellation of the deed of trust and other instruments and
records.

On November 16, 2010, Defendants Deutsche Bank National Trust
Company, Deutsche Bank National Trust Company as Trustee of the GSR
Mortgage Loan Trust 2006-OA1l (“Deutsche Bank as Trustee”), and
American Home Mortgage Servicing, Inc. (“AHMSI”) filed a motion to
dismiss the First Amended Complaint (“First Motion to Dismiss”).

On November 29, 2010, Defendants Fidelity National Title Company

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and Default Resolution Network filed a motion to dismiss the First
Amended Complaint (“Second Motion to Dismiss”).

The First Motion to Dismiss asserts that Plaintiffs’ response
to the First Motion to Dismiss should not be considered by this
Court because the response is late-filed, and that Plaintiffs have
failed to meet the pleading requirements of Federal Rule of Civil
Procedure 8(a). Both motions to dismiss also allege that the First
Amended Complaint should be dismissed on the merits for various
reasons.

Regarding the purported late-filing of Plaintiffs’ response to
the First Motion to Dismiss, the hearing on the First Motion to
Dismiss was originally set for December 16, 2010, meaning that
Plaintiffs’ response should have been filed by December 2, 2010.

No such response was filed. On December 6, 2010, Plaintiffs filed
an opposition to a motion for relief from stay with a caption
containing this adversary proceeding’s number. On December 10,
2010, pursuant to an amended notice of hearing, the hearing on the
First Motion to Dismiss was continued to January 14, 2011.
Plaintiffs’ response was filed on December 30, 2010, which is
timely under the local rules with respect to the continued hearing
date. While Plaintiffs should abide in the future with the
deadlines set out in the local rules, there is no prejudice such
that the First Amended Complaint should be dismissed and the merits
of Plaintiffs’ opposition ignored.

In Plaintiff’s opposition filed on December 30, 2010,
Plaintiffs agreed to amend the First Amended Complaint with regard
to the first, second, and third causes of action in response to the

motions of defendants Fidelity National Title Company, Default

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Resolution Network, Deutsche Bank National Trust Company, Deutsche
Bank as Trustee, and AHMSI (collectively, “Defendants”), as well as
to delete the sixth cause of action. The Court held a hearing on
both motions to dismiss on January 14, 2011.

At the hearing on January 14, 2011, the Court provided the
parties with the Suggestion of Bankruptcy filed by American Brokers
Conduit and American Home Mortgage Servicing, Inc. in this
adversary proceeding and asked the parties to submit supplemental
briefs regarding why the motions to dismiss should proceed
notwithstanding the automatic stay of the bankruptcy case of
Defendant American Brokers Conduit. The matter was continued to
March 1, 2011 with the parties to file a joint statement prior to
the hearing.

On February 18, 2011, the parties filed a joint statement which
the Court reviewed. The Court subsequently issued an order on
February 23, 2011 taking the motions to dismiss off calendar
without prejudice to being restored upon the filing of appropriate
legal authority and/or declarations showing that this Court can
proceed notwithstanding the automatic stay in Defendant American
Brokers Conduit’s bankruptcy case.

On May 2, 2011, Plaintiffs dismissed American Brokers Conduit
from this adversary proceeding. The motions to dismiss were re-set
for hearing on June 30, 2011 at a Case Management Conference held
on May 6, 2011. The June 30, 2011 hearing was continued to
July 14, 2011 by stipulation of the parties. The July 14, 2011
hearing was taken off calendar to allow the Court to issue a

written decision.

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Meanwhile, on May 18, 2011, attorney Mitchell Abdallah
substituted in as counsel for Plaintiffs.

On July 11, 2011, Plaintiffs filed a Second Amended Complaint.?+
The Second Amended Complaint named American Brokers Conduit as a
defendant and did not make any substantive changes to the third,
fourth, or sixth causes of action that Plaintiffs had said would be
made. The Court suggests that if Plaintiffs file another amended
complaint, Plaintiffs should consider that it appears to the Court
that the bankruptcy case of American Brokers Conduit, case number
07-11051, is still pending in the District of Delaware. Plaintiffs
should also consider that: (1) a cause of action under the Real
Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617 (“RESPA”)
should specify which section(s) of RESPA Defendants allegedly
violated; and (2) Plaintiffs should allege sufficient facts about
the contents of Plaintiffs’ alleged letters to AHMSI to show that
the letters qualify as “qualified written requests” under RESPA.

B. FACTUAL BACKGROUND

The following facts are drawn from the First Amended Complaint,
as alleged by Plaintiffs, but have not yet been proven. On or
about April 4, 2006, Plaintiffs obtained a home loan and executed a
promissory note in favor of American Brokers Conduit. The note was
secured by a deed of trust on 411 Quail Run in Aptos, California

(the “Property”). Defendant Mortgage Electronic Registration

' Defendants oppose Plaintiffs’ filing of the Second Amended
Complaint. Plaintiffs filed the Second Amended Complaint without
leave from the Court or consent from Defendants as required by
Federal Rule of Civil Procedure Rule 15(a) (2), incorporated by
Federal Rule of Bankruptcy Procedure Rule 7015. The Court is
deciding these motions to dismiss as to the First Amended Compliant
only, and not as to the Second Amended Complaint.

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Systems (“MERS”) was listed as the beneficiary of the deed of
trust, but MERS never held the note.

On February 1, 2009, Plaintiff Richard Chalgren became unable
to work due to a physical disability and suffered a loss of income.
Plaintiffs were unable to make the monthly payment on the note.
Plaintiffs wrote letters to the loan servicer, AHMSI, requesting
the name, address, and telephone number of the holder of the note
and the name and address of any agent of the holder of the note
which could discuss loan modification options with Plaintiffs.
However, AHMSI did not respond to Plaintiffs’ letters and still, to
this day, has failed to respond to Plaintiffs’ letters. The
failure of AHMSI to respond caused Plaintiffs to suffer emotional
distress.

On May 5, 2009, AHMSI, Default Resolution Network, and Fidelity
National Title Company acted in concert to cause a notice of
default to be recorded in the official records of the county of
Santa Cruz. The notice of default falsely stated that Default
Resolution Network had contacted Plaintiffs before the notice of
default was recorded as required by California Civil Code
section 2923.5.

On June 25, 2009, MERS as nominee for defendant American
Brokers Conduit assigned the deed of trust to Deutsche Bank as
Trustee. Kolrell Harper signed this document on June 30, 2009 as
Vice President of MERS. The assignment was produced by defendant
DOCX, LLC which is a subsidiary of defendant Lender. Processing
Services. Lender Processing Services has admitted that there were
faults in the documents produced by the DOCX office and Plaintiffs
are informed and believe that there was widespread document fraud.

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The note was bundled into a pool of home mortgages which were
securitized and sold to investors. At the time the note was
assigned to the trust, the trust was closed. Also, at the time of
the assignment, American Brokers Conduit was in a Chapter 11
bankruptcy proceeding, but the assignment was made without approval
from the bankruptcy court overseeing the American Brokers Conduit
bankruptcy case.

On July 6, 2009, an instrument was recorded in the official
records of the county of Santa Cruz purporting to be an assignment
of the deed of trust from MERS to Deutsche Bank National Trust
Company.

On July 17, 2009, Plaintiffs sent demand letters via certified
mail to Defendants pursuant to RESPA, wherein Plaintiffs requested
the name of the holder of the note or the agent for such holder
with authority to discuss loan modifications. Defendants have
failed to respond to those demand letters, causing Plaintiffs to be
unable to communicate with anyone with the authority to modify
Plaintiffs’ loan and threatening Plaintiffs with the loss of
Plaintiffs’ home of 15 years.

On August 14, 2009, Plaintiffs filed this chapter 13 bankruptcy
petition.

On September 4, 2009, defendants Fidelity National Title
Company, AHMSI, and Power Default Services acted in concert to
cause a notice of trustee’s sale to be recorded in the official
records of the county of Santa Cruz in violation of the automatic

stay. This recordation caused Plaintiffs emotional distress.

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Cc. LEGAL STANDARD
The Ninth Circuit has stated that the standard of review for
motions to dismiss is:

The nature of dismissal requires us to accept all
allegations of fact in the complaint as true and construe
them in the light most favorable to the

plaintiffs. However we are not required to accept as true
conclusory allegations which are contradicted by documents
referred to in the complaint, and we do not

necessarily assume the truth of legal conclusions merely
because they are cast in the form of factual allegations.

Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir.

2003) (citations and internal guotations omitted).

D. ANALYSIS

The First Motion to Dismiss asserts that the First Amended
Complaint fails to differentiate between Defendants in violation of
Federal Rule of Civil Procedure 8(a), as incorporated by Federal
Rule of Bankruptcy Procedure 7008. The Court has reviewed the
First Amended Complaint and has determined that the First Amended
Complaint identifies the transactions giving rise to the causes of
action and puts each Defendant on notice of each Defendant’s
alleged conduct. The First Motion to Dismiss is denied on this
basis.

(1) Plaintiffs’ First Cause of Action

The first cause of action is against AHMSI, Default Resolution
Network, and Fidelity National Title Company for violation of
California Civil Code section 2923.5. Plaintiffs assert that
Default Resolution Network did not contact Plaintiffs about
alternatives to foreclosure prior to recording the notice of
trustee’s sale. The First Amended Complaint only requests damages

for this statutory violation.

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The First Motion to Dismiss asserts that Plaintiffs need to
allege tender before obtaining a postponement of the foreclosure

sale. However, the case of Mabry v. Superior Court, 185 Cal. App.

4th 208, 214 (2010), relied on by Defendants, explicitly held that
tender was not required to postpone a foreclosure sale under
California Civil Code section 2923.5. Mabry, 185 Cal. App. 4th

at 213. In any event, Plaintiffs are only required to allege that
Plaintiffs attempted to tender -- or were capable of tendering --
the value of the property, or that such equitable circumstances
existed that conditioning rescission on any tender would be

inappropriate. Mangindin v. Washington Mutual Bank, 637 F. Supp.

2d 700, 706 (N.D. Cal. 2009).

However, as conceded by Plaintiffs, the remedy for a violation
of California Civil Code section 2923.5 is not damages, but a
postponement of the foreclosure sale to allow such communications
to take place. Mabry, 185 Cal. App. 4th at 214. Because the
requested damages are not available, this Court dismisses this
cause of action with leave to amend.

(2) Second Cause of Action

The second cause of action is against AHMSI for violation
of RESPA for failure to respond to Plaintiffs’ letters requesting
information relating to the identity of the holder of the note and
such holder’s authorized agent. Plaintiffs have not provided
copies of the letters to this Court. The First Motion to Dismiss
asserts that Plaintiffs need to specify which section of RESPA
AHMSI allegedly violated, and Plaintiffs have indicated, in
Plaintiffs’ opposition to that motion, that Plaintiffs plan to

specify 12 U.S.C. section 2605(f) (1) in any amended complaint.

|

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While the First Motion to Dismiss asserts that the First
Amended Complaint fails to allege damages caused by AHMSI’s failure
to respond, the First Amended Complaint’s statement of facts
alleges that the failure of AHMSI to respond caused Plaintiffs
great emotional distress. This Court notes that the courts are
divided on whether emotional distress damages are recoverable under

section 2605(f)(1). Compare Allen v. United Financial Mortgd.

Corp., 660 F. Supp. 2d 1089, 1097 (N.D. Cal. 2009), with Espinoza

v. Recontrust Co., N.A., 2010 WL 2775753, *4 (S.D. Cal. July 13,

2010). However, this Court will not decide this legal issue at the
pleading stage. Therefore, the cause of action is not dismissed on
this basis.

The First Motion to Dismiss also asserts that Plaintiffs’
letters do not qualify as “Qualified Written Requests” under RESPA.
The statute defines a Qualified Written Request as either (1) a
letter saying that the account is in error, or (2) a letter
requesting other information. 12 U.S.C. § 2605(e) (1) (b). The
RESPA statute provides that a response is required when the letter
requests information relating to the servicing of the
loan. 12 U.S.C. § 2605(e) (1) (a). Servicing is defined as:
“receiving any scheduled periodic payments from a borrower pursuant
to the terms of any loan, .. . and making the payments of
principal and interest and such other payments with respect to the
amounts received from the borrower as may be required pursuant to
the terms of the loan.” 12 U.S.C. § 2605(i).

While the First Motion to Dismiss asserts that Plaintiffs must
allege that the letters stated that the account was in error, the

statute defining what constitutes a Qualified Written Response is

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1} written in the disjunctive, and Plaintiffs have asserted that the
2 |) letters contained requests for other information. This Court
3 |} agrees with United States District Judge Fogel’s reading
4] of 12 U.S.C. § 2605(e) (1) (6b) found in Luciw v. Bank of America,
5N.A., 2010 WL 3958715, *3 (N.D. Cal. Oct. 7, 2010), which holds
6li/that a letter can be a Qualified Written Request even if the letter
71 does not state that the account is in error. The Court notes that
8 ithe statute does not clearly state that a letter is not a Qualified
9 || Written Response if the letter requests information both about the
10 || servicing of the loan and information not related to the servicing
11 | of the loan. Luciw, 2010 WL 3958715 at *3.
12 However, the First Amended Complaint fails to allege sufficient
13} facts about the contents of the letters to show that Plaintiffs’
14} letters were related to the servicing of the loan such as to give
15] rise to a statutory obligation by AHMSI to respond. The First
16 || Amended Complaint alleges that the letters request the identity of
17 | the holder of the note or such holder’s agent, which does not
18 || appear to relate to the receipt or application by AHMSI of periodic
19 |} payments received from Plaintiffs. While Plaintiffs’ December 6,
20 | 2010 opposition to a motion for relief from stay provides a copy of
21] the letter sent by Plaintiffs to Defendants, the Court is not
22 | considering that letter at this time because the letter was not
23 | incorporated into the First Amended Complaint.
24 The Court dismisses the second cause of action with leave to
25 |} amend.
26 (3) Third Cause of Action
27 The third cause of action is against Fidelity National Title
28 |} Company and AHMSI for violation of the automatic stay pursuant to
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Bankruptcy Code section 362(k). While the Second Motion to Dismiss
asserts that this cause of action should be dismissed for failure
to allege conduct rising to a requisite level of outrageousness,
the determination of outrageousness is a factual issue, and the
case relied upon in the Second Motion to Dismiss is a California
state law case not involving Bankruptcy Code section 362(k).
However, both motions to dismiss assert that the First Amended
Complaint fails to allege that the two defendants willfully
violated the automatic stay. Bankruptcy Code section 362(k)

clearly requires a willful violation. In re Bloom, 875 F.2d 224,

227 (9th Cir. 1989). The First Amended Complaint contains no
allegations of willfulness and/or knowledge of the bankruptcy case
on the part of Fidelity National Title Company and/or AHMSI, and
Plaintiffs have indicated that Plaintiffs plan to amend the First
Amended Complaint to so allege. The Court dismisses the third
cause of action with leave to amend.

(4) Fourth Cause of Action

The fourth cause of action is against all Defendants for
declaratory relief. The First Amended Complaint requests the
following declaratory relief: (1) a finding that the deed of trust
is unenforceable because the deed of trust was severed from the
note, rendering the note unsecured; (2) a finding that the notice
of default is void because the deed of trust was unenforceable;
(3) a finding that assignment of the deed of trust to Deutsche Bank
as Trustee is of no effect because the assignment was (a) made
while American Brokers Conduit was in bankruptcy and (b) made after
the securitized trust had closed; and (4) a finding that the notice
of trustee’s sale is void for being in violation of the automatic

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stay. This cause of action does not request that the note and deed
of trust be rescinded or otherwise set aside.

Both motions to dismiss assert that the fourth cause of action
must be dismissed because the First Amended Complaint fails to
allege that Plaintiffs either have tendered, or can tender, the
amount of the outstanding loan balance. All but one of the cases
cited by Defendants are cases in which a party requested quiet
title or declaratory relief rescinding a loan contract, and those
cases are not applicable.

The reasoning of Chavez v. Recontrust Co., 2008 WL 5210893

(E.D., Cal. Dec. 11, 2008), is not disposative here and this Court
does not agree with it in any event. In Chavez, a plaintiff
requested -- among other things -- an injunction against a
foreclosure sale without either alleging that the plaintiff had
tendered, or was able to tender, the amount outstanding on the
loan. The Chavez court held: “[t]he law is long-established that a
trustor or his successor must tender the obligation in full as a
prerequisite to challenge of the foreclosure sale.” Chavez, 2008

WL 5210893 at *6 (quoting U.S. Cold Storage v. Great Western

Savings & Loan Assn., 165 Cal. App. 3d 1214, 1222, (1985)). The

quoted language is inapposite because the language of U.S. Cold
Storage refers to an attempt to undo a foreclosure sale after the
fact, rather than a request for declaratory relief based on a
finding that a foreclosure sale cannot proceed because the wrong
party is seeking to foreclose.

In the context of Truth in Lending Act (“TILA”) violations,
Judge Ware has held that the Ninth Circuit “gives a trial court
discretion to condition rescission on a tender by the borrower of

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is})

the property, or the property’s reasonable value, to the lender.

Yamamoto v. Bank of New York, 329 F.3d 1167, 1171 (9th Cir. 2003).

Mangindin, 637 F. Supp. 2d at 705-06. Judge Ware stated:

Notably absent from Plaintiffs’ Complaint is any allegation

that they attempted to tender, or are capable of tendering,

the value of the property pursuant to the rescission

framework established by TILA. Nor do Plaintiffs allege

that such equitable circumstances exist that conditioning

rescission on any tender would be inappropriate. Thus, the

Court finds that Plaintiffs have failed to adequately

allege that they are entitled to rescission under TILA.
Mangindin, 637 F. Supp. 2d at 706. Thus, Plaintiffs are only
reguired to allege that Plaintiffs attempted to tender -- or were
capable of tendering -- the value of the property, or that such
equitable circumstances existed that conditioning rescission on any
tender would be inappropriate.

The First Motion to Dismiss also asserts that the California
nonjudicial foreclosure statutes do not require a foreclosing
lender to produce the original copy of the note in order to
foreclose. However, the First Amended Complaint does not request
declaratory relief based on a finding that a foreclosure cannot
take place because no party holds an original copy of the note.
The First Amended Complaint seeks declaratory relief regarding
whether the note is secured; whether the assignment of the note is
of any legal effect; and whether the notice of trustee’s sale is
void.

The First Motion to Dismiss next asserts that the First Amended
Complaint fails to allege with sufficient specificity that the
purported transfer of the note from American Brokers Conduit took
place while American Brokers Conduit was a debtor in a bankruptcy
proceeding. The First Amended Complaint clearly alleges that: “at

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the time of the assignment, American Broker’s Conduit was ina
bankruptcy proceeding under chapter 11 of the U.S. Bankruptcy Code.
Plaintiffs are informed and believe that the bankruptcy court did
not authorize or approve the assignment of the deed of

trust. . . .” First Amended Complaint at page 6, @ 20. This
allegation is more than a mere threadbare recital and is sufficient
to withstand this motion to dismiss. Therefore, the cause of
action is not dismissed on this basis.

The First Motion to Dismiss asserts that American Brokers
Conduit transferred the note and deed of trust on June 5, 2006 and
provides a copy of a loan history for the property. This Court
will not take judicial notice of the copy at this time because
Plaintiffs have objected to the admissibility of this document and
the copy was not part of an official record or court decision.

The First Motion to Dismiss also argues that -- even if the
deed of trust was transferred out of the bankruptcy estate of
American Brokers Conduit without bankruptcy court approval --
Plaintiffs have no standing to challenge the transfer. Plaintiffs
assert that Plaintiffs have standing because the legal effect of
the transfer directly affects Defendants’ ability to foreclose on
Plaintiffs’ home. American Brokers Conduit filed for relief under
chapter 11 as case number 07-11047 in the Bankruptcy Court for the
District of Delaware. Bankruptcy Code section 1109(b) provides: “a
party in interest . . . may raise and may appear and be heard on
any issue in a case under this chapter.” 11 U.S.C. § 1109(b). The
term party in interest is meant to be elastic, and whether a party
is a party in interest is determined by the facts of the case. In

re Amatex Corp., 7/55 F.2d 1034, 1042 (3d Cir. 1985). The First

aa

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1 |} Amended Complaint clearly alleges that Plaintiffs have a very
2 |} practical stake in the legal effectiveness of the transfer of the
3|}deed of trust. At least insofar as Plaintiffs seek to challenge
4) that transfer, Plaintiffs’ interest in the American Brokers Conduit
5 |} bankruptcy proceeding is sufficient to make Plaintiffs a party in
6 || interest.
7 The First Motion to Dismiss further asserts that, even if the
8 | assignment took place after American Brokers Conduit filed for
9! bankruptcy, the assignment was in the ordinary course of business
10 } and did not require bankruptcy court approval. Under these
11] circumstances, any assignment would be valid. 11 U.S.C.
12 || § 363(c) (1). The First Amended Complaint only alleges that the
13 |} assignment was made when American Broker’s Conduit was in
14 | bankruptcy and that there was no authorization from the bankruptcy
15 | court, which is only required if the assignment was made outside of
16 }the ordinary course of business. Because the First Amended
17] Complaint fails to allege that the assignment was not .in the
18 ll ordinary course of business, this Court dismisses the fourth cause
19 |} of action with leave to amend with respect to the fact that the
20 |} assignment from American Brokers Conduit was invalid as an
21 | unauthorized post-petition transfer from a bankruptcy debtor.
22 Finally, the First Motion to Dismiss asserts that the First
23 | Amended Complaint must be dismissed because Plaintiffs’ bad faith
24 i|-- as evidenced by Plaintiffs’ failure to tender or to make post-
25 |} petition payments on the note -- estops Plaintiffs from seeking
26 || equitable relief. However, the issue of Plaintiffs’ bad faith is a
27 | factual issue which this Court will not decide at the motion to
28 ||dismiss stage. Also, as previously mentioned, this Court does not
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hold -- and leaves for trial, a possible summary judgment motion or
other context -- Defendants’ contention that alleging tender in the
particular manner that Defendants say is mandatory is a requirement
to obtaining the declaratory relief sought in Plaintiffs’ First
Amended Complaint. Mangindin, 637 F. Supp. 2d at 706.

For the above reasons, this Court dismisses the fourth cause of
action with leave to amend only insofar as the fourth cause of
action requests a finding that the assignment from American Brokers
Conduit was without legal effect for being an unauthorized post-
petition transfer from a bankruptcy debtor.

(5) Fifth Cause of Action

The fifth cause of action is against all Defendants for
injunctive relief. Plaintiffs request an injunction against a
foreclosure sale of the property. Both motions to dismiss assert
that this cause of action should be dismissed because injunctive
relief cannot be granted without the existence of a substantive

cause of action. Shell Oi1 Co. v. Richter, 52 Cal. App. 2d 164,

168 (Cal. App. 1942). The First Amended Complaint has adequately
pled a substantive cause of action for declaratory relief, so the
motions to dismiss are denied as to the fifth cause of action.

(6) Sixth Cause of Action

The sixth cause of action is against all Defendants for
cancellation of the deed of trust and other instruments and
records. In Plaintiffs’ responses to both motions to dismiss,
Plaintiffs have agreed to delete the sixth cause of action from
future amended complaints based on Defendants’ arguments. Because,
as noted earlier, Plaintiffs could allege that Plaintiffs attempted
to tender -- or were capable of tendering -- the value of the

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property, or that such equitable circumstances exist that
conditioning rescission on any tender would be inappropriate, this
Court dismisses the sixth cause of action with leave to amend.

E. CONCLUSION

For the forgoing reasons, Defendants’ motions are granted in
part with leave to amend and denied in part. Counsel for each set
of moving parties shall prepare a form of order consistent with
this ruling and submit the proposed order to the Court after
service on counsel for Plaintiffs. The Court prefers for all

counsel to sign off on the form of order.

Dated: \o\4 \\

RTHUR’ S. WETSSBRODT
UNITED STATES BANKRUPTCY JUDGE

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AAT Wr DO Weerahuarh

For The Northern District Of California

UNITED STATES BANKRUPTCY COURT

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Court Service List

Richard Scott Chalgren
Karen Chalgren

411 Quail Run

Aptos, CA 95003

Mitchell L. Abdallah
Abdallah Law Group
555 Capitol Mall #725
Sacramento, CA 95814

Brandon J. Witkow

Locke Lord Bissell and Liddell, LLP
300 South Grand Avenue, Suite 2600
Los Angeles, CA 90071

James D. Burnside, III

Dowling, Aaron & Keeler, Inc.

8080 North Palm Avenue, Third Floor
Fresno, CA 93729-8902

James D. Burnside, III
Dowling, Aaron & Keeler, Inc.
P.O. Box 28902

Fresno, CA 93729

Devin Derham-Burk
P.O. Box 50013
San Jose, CA 95150-0013

Office of the U.S. Trustee / SJ
280 South Ist St. #268
San Jose, CA 95113-3004

D ONC; ' . . .
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