HELEN GALOPE AND HER ATTORNEY LENORE ALBERT THRILLED WITH OUTCOME OF THE NINTH CIRCUIT COURT OF...

UNITED STATES COURT OF APPEALS NINTH CIRCUIT

No. 12-56892

HELEN GALOPE, on behalf of herself and all others similarly situated,

Plaintiff-Appellant,

v.

DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF MAY 1, 2007 SECURITIZED ASSET BACKED RECEIVABLES LLC TRUST 2007-BR4; WESTERN PROGRESSIVE, LLC; BARCLAYS BANK PLC, BARCLAYS

CAPITAL REAL ESTATE INC. d/b/a HOMEQ SERVICING; OCWEN LOAN SERVICING, LLC, and DOES 4 through 10, Inclusive,

Defendants-Appellees.

Appeal from the U.S. District Court for Central California, Santa Ana The Honorable Cormac J. Carney

District Court Case 8:12-cv-00323-CJC-RNB

ANSWERING BRIEF OF APPELLEES BARCLAYS BANK PLC and

BARCLAYS CAPITAL REAL ESTATE INC. d/b/a HOMEQ SERVICING

Case: 12-56892 07/01/2013 ID: 8688365 DktEntry: 25-1 Page: 1 of 30 (1 of 31)

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 26.1(a) of the Federal Rules of Appellate Procedure,

Appellee Barclays Bank PLC hereby states that it is a wholly owned subsidiary of

Barclays PLC and that no publicly held corporation owns more than 10% of

Barclays Bank PLC’s stock. Appellee Barclays Capital Real Estate Inc., d/b/a

HomEq Servicing, hereby states that it is a wholly owned subsidiary of Barclays

Capital Real Estate Holdings Inc. and that its ultimate parent is Barclays PLC, a

publicly held company.


TABLE OF CONTENTS

Page

JURISDICTION ......................................................................................................... 1

ISSUES PRESENTED ............................................................................................... 1

STATEMENT OF THE CASE .................................................................................. 2

A. Introduction ........................................................................................... 2

B. Procedural Background ......................................................................... 4

C. Statement of Facts ................................................................................. 5

1. Background ................................................................................. 5

2. The District Court Dismissed Appellant’s Complaint ................ 8

STANDARD OF REVIEW ....................................................................................... 9

ARGUMENT ........................................................................................................... 10

I. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT LACKED ARTICLE III STANDING TO ASSERT ANY OF HER CLAIMS ............................................................................... 10

II. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT LACKED STANDING TO ASSERT HER CALIFORNIA STATUTORY CLAIMS ..................................................... 14

III. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT’S FAL CLAIM WAS TIME BARRED ................................ 17

IV. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT’S AIDING AND ABETTING CLAIM FAILED FOR LACK OF A VIABLE PRIMARY TORT CLAIM ..................................... 18

V. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT LACKED STANDING TO ASSERT HER CLAIMS FOR BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING .......................................................................................... 19

VI. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT FAILED TO PLEAD THE BASIC ELEMENTS OF COMMON LAW FRAUD ........................................................................... 20

CONCLUSION ....................................................................................................... 21


TABLE OF AUTHORITIES

Page(s)

FEDERAL CASES

Benson v. J.P. Morgan Chase Bank, N.A., 673 F.3d 1208 (9th Cir. 2012) .............................................................................. 9

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977) ............................................................................................ 13

Castro-Martinez v. Holder, 674 F.3d 1073 (9th Cir. 2011) ...................................................................... 18, 19

Conservation Nw. v. Sherman, No. 11–35729, 2013 WL 1760807 (9th Cir. Apr. 25, 2013) .............................. 19

DaimlerChrysler v. Cuno, 547 U.S. 332 (2006) ............................................................................................ 11

Gest v. Bradbury, 443 F.3d 1177 (9th Cir. 2006) ............................................................................ 10

Gonzalez v. Kinro, Inc., 473 Fed. App’x 768 (9th Cir. 2012) ................................................................... 14

Kaing v. Pulte Homes, Inc., No. 09-5057, 2010 WL 625365 (N.D. Cal. Feb. 18, 2010) ................................ 19

Lee v. City of Los Angeles, 250 F.3d 668 (9th Cir. 2001) .............................................................................. 10

Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ...................................................................................... 10, 11

Recinto v. U.S. Dep’t of Veterans Affairs, 706 F.3d 1171 (9th Cir. 2013) ............................................................................ 19

Rubio v. Capital One Bank, 613 F.3d 1195 (9th Cir. 2010) ............................................................................ 14

Rubke v. Capitol Bancorp Ltd., 551 F.3d 1156 (9th Cir. 2009) .............................................................................. 9


TABLE OF AUTHORITIES (continued)

Page(s)

Sanders v. Brown, 504 F.3d 903 (9th Cir. 2007) .............................................................................. 10

TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820 (9th Cir. 2011) .............................................................................. 17

United States v. Socony-Vacuum Oil Co., 310 US 150 (1940) .............................................................................................. 16

Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981 (9th Cir. 2009) ................................................................................ 9

CALIFORNIA CASES

Bower v. AT&T Mobility, LLC, 196 Cal. App. 4th 1545 (2011) ........................................................................... 14

Casey v. U.S. Bank Nat’l Ass’n, 127 Cal. App. 4th 1138 (2005) ........................................................................... 18

Engalla v. Permanente Med. Grp., Inc., 15 Cal. 4th 951 (1997) ........................................................................................ 21

Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (2011) .................................................................................. 16, 17

FEDERAL STATUTES

28 U.S.C. § 1291 ........................................................................................................ 1

28 U.S.C. § 1331 ........................................................................................................ 1

28 U.S.C. § 1332 ........................................................................................................ 1

CALIFORNIA STATUTES

CAL. BUS. & PROF. CODE § 17200 et seq ................................................................. 14


TABLE OF AUTHORITIES (continued)

Page(s)

CAL BUS. & PROF. CODE § 17204 ............................................................................ 14

CAL. BUS. & PROF. CODE § 17500 et seq. ................................................................ 14

CAL. CIV. PROC. § 338(a) ......................................................................................... 17

OTHER AUTHORITIES

FED. R. APP. P. 30(a)(2) ............................................................................................. 2

Fed. R. Civ. P. 12(b)(1) .................................................................................... 1, 9-10

Fed. R. Civ. P. 12(b)(6) .................................................................................... 1, 9, 10

NINTH CIR. R. 30-1.5 .................................................................................................. 2

U.S. CONST., ART. III ........................................................................................passim


JURISDICTION

The District Court (Hon. Cormac J. Carney) had jurisdiction over this

action pursuant to 28 U.S.C. § 1332 and 28 U.S.C. § 1331. The District Court

dismissed Appellant’s Third Amended Complaint (“TAC”), filed on July 20, 2012,

as to Barclays Bank PLC and Barclays Capital Real Estate Inc., d/b/a HomEq

Servicing (collectively, the “Barclays Appellees”) pursuant to Rules 12(b)(1) and

12(b)(6) of the Federal Rules of Civil Procedure. This Court has jurisdiction over

this appeal from the final judgment under 28 U.S.C. § 1291.

ISSUES PRESENTED

1. Whether the District Court correctly dismissed all of Appellant’s claims

premised on the Barclays Appellees’ alleged manipulation of the London

Interbank Offered Rate (“LIBOR”), for failure to allege any injury

attributable to such alleged manipulation, where Appellant (i) defaulted on

her adjustable rate mortgage loan while the interest rate was fixed—and long

before it was to be reset based on a calculation involving LIBOR—and

(ii) thus never made a single loan payment at a rate tied to LIBOR.

2. Whether the District Court correctly dismissed Appellant’s claims in

connection with a loan modification she secured prior to her default, for

failure to allege any injury, where documentary evidence establishes that


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Plaintiff received in writing the material terms of the modification, which

decreased the amount of her loan payments.

STATEMENT OF THE CASE

A. Introduction

Appellant’s lengthy submissions—over 60 pages of briefing and an

“Excerpt of Record” well in excess of 2,000 pages1—serve only to confuse the

straightforward issues before this Court: whether Appellant has adequately alleged

injury-in-fact in connection with her various claims sufficient to establish her

standing to bring federal and state law claims against Defendants. The District

Court correctly concluded that Appellant has not.

Appellant’s principal allegation is that she faces foreclosure because

of the alleged manipulation of LIBOR by the Barclays Appellees. But the

allegations of the TAC demonstrate that there is no connection whatsoever

between Appellant’s claimed injury and the Barclays Appellees’ alleged conduct

1 Appellant’s Excerpt of Record is wholly improper; indeed, it hardly qualifies as an “excerpt” at all. Appellant has compiled hundreds of pages of materials irrelevant to her appeal in clear violation of the Circuit Rules. See CIRCUIT RULE 30-1.5 (“The excerpts of record shall not include briefs or other memoranda of law filed in the district court unless necessary to the resolution of an issue on appeal, and shall include only those pages necessary therefor.”); see also FED. R. APP. P. 30(a)(2).


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because Appellant defaulted on her mortgage loan when the rate on that loan was

fixed, and thus never made a single mortgage payment that was based on any

interest rate tied to LIBOR. In the absence of any injury, the District Court

properly dismissed Appellant’s claims for failure to plead standing under either

Article III or the California statutes upon which her state law claims are premised.

Appellant’s other allegation before the District Court was that

Barclays Capital Real Estate, Inc., d/b/a HomEq Servicing (“HomEq”),

deliberately faxed her loan modification documents that omitted material terms to

“lull” her into believing that she received more favorable terms so that she would

continue to pay the modified interest rate without seeking other sources of

financing. But Appellant fails to allege that she suffered any injury whatsoever as

a result of that purported conduct. Not only were the terms that Appellant claims

were missing actually present on the face of the document she admittedly received,

but Appellant actually benefitted from the loan modification, which lowered the

interest rate on her mortgage loan and significantly reduced her monthly payments.

Therefore, even accepting all of the allegations of the TAC as true,

Appellant fails to allege any injury traceable to the Barclays Appellees’ conduct.

The District Court’s decision should be affirmed.


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B. Procedural Background

Appellant, a resident of Tarzana, California, filed this action in the

United States District Court for the Central District of California on March 1,

2012. (ER 33.) The initial Complaint, which made no mention of LIBOR, named

Deutsche Bank National Trust Company, Western Progressive LLP, and John

Does 1-10 as Defendants. (ER 33-49.) It was not until Appellant filed the TAC

that she referenced LIBOR and named the Barclays Appellees as defendants.

The TAC asserted claims against the Barclays Appellees for

(i) violation of the Sherman Antitrust Act (“Sherman Act”), (ii) violation of

California’s Business and Professions Code (“UCL”), (iii) violation of California’s

False Advertising Law (“FAL”), (iv) aiding and abetting in violation of the UCL,

(v) breach of the covenant of good faith and fair dealing, and (vi) fraud. (ER 9.)

Those claims were based on two sets of factual allegations. First,

Appellant based her Sherman Act, UCL, FAL, implied covenant of good faith and

fair dealing, and fraud claims on her allegation that the Barclays Appellees (and

others) conspired to manipulate LIBOR and thereby injured Appellant. (ER 672-

73, 682-84, 688-90.) Second, Appellant based her claims for violations of the

UCL, FAL, and implied covenant of good faith and fair dealing, as well as her

aiding and abetting claim under the UCL, on HomEq’s allegedly deliberate


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omission of material terms from the loan modification agreement faxed to her on

April 7, 2008. (ER 680-81, 684-85, 688.)

On September 26, 2012, the District Court granted summary judgment

in favor of the Deutsche Bank Defendants. (ER 18.) On October 11, 2012, the

District Court granted the Barclays Appellees’ motion to dismiss and dismissed the

TAC with prejudice. Appellant filed her notice of appeal on October 16, 2012.

(ER 1.)

C. Statement of Facts

1. Background

In December 2006, Appellant borrowed $522,000 from New Century

Mortgage Corporation and executed an Adjustable Rate Note (the “Note”) with

Barclays Capital Real Estate Inc., d/b/a HomEq, as the designated loan servicer.

(ER 656 ¶¶ 15, 18.) Pursuant to Section 2 of the Note, Appellant agreed to “pay

interest at a yearly rate of 8.775%,” which would be subject to “change in

accordance with Section 4 of [the] Note.” (ER 2083; see also ER 9.) Section 4(a)

of the Note provides that Appellant’s interest rate “may change on the first day of

January, 2009 and on the same day of every 6th month thereafter. Each date on

which my interest rate could change is called an ‘Interest Change Date.’” (ER

2084 (emphasis added).) Section 4 further provides that, “[b]eginning on the first

Interest Change Date,” Appellant’s new interest rate would be calculated by adding


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6.150% to “the average of Interbank offered rates for six-month dollar deposits in

the London market (‘LIBOR’) as published in The Wall Street Journal.” (Id.)

Appellant thus agreed in writing that the interest rate on the Note (i) would be

fixed at 8.775% for the first two years (from December 2006 through December

2008), and (ii) would adjust on January 1, 2009, based on a calculation referencing

LIBOR. (ER 2084; see also ER 659 ¶¶ 43-45.)

In April 2007, Appellee HomEq began to service the loan and, by

April 2008, Appellant had become delinquent in her loan obligations. (ER 9-10,

656 ¶ 18, 660 ¶ 53.) To cure her default, Appellant obtained a loan modification

agreement (the “Modification Agreement”) on April 7, 2008—more than seven

months before January 1, 2009, when the interest rate for her Note was scheduled

to adjust to a rate linked to LIBOR. (ER 10, 660 ¶¶ 54-57, 695-97.) Section 1(c)

of the Modification Agreement postponed the first Interest Rate Change date by

more than four years, providing that “[t]he date on which the interest rate change is

next scheduled to occur is hereby changed to 04/01/2013.” (ER 695.)

Accordingly, Appellant’s interest rate was not scheduled to adjust to a rate linked

to LIBOR until April 1, 2013. (Id.) When Appellant executed the Modification

Agreement on April 17, 2008, her interest rate decreased from 8.775% to 5.500%,

thereby reducing her monthly mortgage payments by nearly $800, from $3,817.13

to $3,027.02. (ER 14, 697.)


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According to the TAC, a portion of the Modification Agreement that

Appellant received from Appellee HomEq was missing because the fax

transmission contained two legal sized pages, purportedly “sandwiched between”

letter sized pages, but Appellant’s fax machine printed all pages on letter sized

paper. (ER 10, 663 ¶¶ 75-76.) Consequently, Appellant alleges that Section 1(d)

of the Modification Agreement was cut off at the bottom of the first page. (ER 662

¶¶ 71-73.) Appellant allegedly contacted a representative of the Barclays

Appellees about the discrepancy she noticed in Section 1(d), but has never alleged

that she demanded a complete copy of the document. (ER 664 ¶¶ 81-87.)

Although Appellant claims that, on some unspecified date after she executed the

Modification Agreement, she became “shocked and concerned that her

modification payments may change on April 1, 2013” (Op. Br. at 12; ER 663 ¶ 74),

that fact was fully disclosed in Sections 1(b) and 1(c) of the Modification

Agreement, which Appellant admits that she received. (ER 14 n. 4 (citing TAC ¶¶

71-75); ER 695.)

Long before Appellant’s monthly interest rate was set to change in

April 2013, Appellant defaulted on her modified monthly mortgage payments.

(ER 664 ¶¶ 87-88.) Thereafter, on July 31, 2009, a Notice of Default was recorded

on the subject property, and, in January 2010, Appellant filed for Chapter 7

bankruptcy protection. (ER 664-65 ¶¶ 88-89.) Because she defaulted prior to


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April 1, 2013, under the relevant agreements, Appellant has never made any

payments at a rate linked to LIBOR.

After a series of attempts to secure relief in bankruptcy court,

Appellant instituted the instant action before the District Court on March 1, 2012.

(ER 33.) Appellant named the Barclays Appellees as defendants in the TAC on

July 20, 2012.

2. The District Court Dismissed Appellant’s Complaint.

On October 11, 2012, the Honorable Cormac J. Carney dismissed

Appellant’s claims against the Barclays Appellees in their entirety. The District

Court dismissed all claims based on alleged LIBOR manipulation for failure to

plead standing under Article III and dismissed Appellant’s UCL and FAL claims

for failure to plead statutory standing. (ER 13-16.) The District Court held that

Appellant did not, and could not, allege an injury traceable to the Barclays

Appellees’ alleged LIBOR manipulation due to the “simple fact that her interest

rate, both in her original loan and the Loan Modification Agreement, have not been

affected by LIBOR.” (ER 13; see also ER 15-16.) Appellant’s fraud claim was

dismissed both for lack of standing and failure to allege the essential element of

injury. (ER 17.)

Appellant’s claims based on the allegedly missing portions of the

faxed Modification Agreement were also dismissed for lack of standing. As to


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Appellant’s UCL claim, the District Court held that (i) the “reduced interest rate

and lower monthly payments” Appellant received pursuant to the Modification

Agreement contradicted any claim of injury (ER 14), and (ii) the allegation that

Appellant was deprived of notice of the future change in interest rate was “directly

contradicted by language in the Loan Modification Agreement that [Appellant]

admits to having received.” (ER 14 n.4.) Appellant’s FAL claim based on the

purportedly missing portions of the faxed Modification Agreement was also

dismissed as time barred. (ER 15-16.) Finally, Appellant’s claim for breach of the

covenant of good faith and fair dealing was dismissed for the same reasons as her

UCL claims, and Appellant’s aiding and abetting claim was dismissed for failure to

allege a primary violation. (ER 16.)

STANDARD OF REVIEW

This Court reviews de novo dismissal for failure to state a claim under

Federal Rule of Civil Procedure 12(b)(6). Rubke v. Capitol Bancorp Ltd., 551

F.3d 1156, 1161 (9th Cir. 2009). A dismissal for lack of subject matter jurisdiction

under Federal Rule of Civil Procedure 12(b)(1) is likewise reviewed de novo.

Benson v. J.P. Morgan Chase Bank, N.A., 673 F.3d 1208, 1211 (9th Cir. 2012).

Well-pleaded factual allegations are taken as true and construed in the light most

favorable to the plaintiff. Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981,

989 (9th Cir. 2009). However, “[c]onclusory allegations and unreasonable


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inferences . . . are insufficient to defeat a motion to dismiss.” Sanders v. Brown,

504 F.3d 903, 910 (9th Cir. 2007). While appellate review of a Rule 12(b)(6)

dismissal is generally limited to the contents of the complaint, this Court “may

consider ‘material which is properly submitted as part of the complaint,’” or

documents upon which the complaint “necessarily relies,” and whose

“‘authenticity . . . is not contested.’” Lee v. City of Los Angeles, 250 F.3d 668, 688

(9th Cir. 2001) (citations omitted). Moreover, an appellate court may consider

extrinsic evidence in addition to the face of the pleadings when reviewing a Rule

12(b)(1) dismissal. Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139

(9th Cir. 2003).

ARGUMENT

I. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT LACKED ARTICLE III STANDING TO ASSERT ANY OF HER CLAIMS.

Article III of the United States Constitution requires a plaintiff to have

“standing” to bring any claim. Gest v. Bradbury, 443 F.3d 1177, 1181 (9th Cir.

2006). To properly plead Article III standing, a plaintiff must sufficiently allege

(i) a “concrete and particularized” injury, (ii) a “causal connection” showing that

the injury is “fairly traceable to the challenged action of the defendant,” and (iii) a

likelihood that a favorable decision will redress the injury. Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560-61 (1992) (citation and internal quotation omitted). A


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plaintiff invoking federal jurisdiction bears the burden of establishing Article III

standing “for each claim [she] seeks to press” and “‘for each form of relief that is

sought.’” DaimlerChrysler v. Cuno, 547 U.S. 332, 352 (2006) (citation omitted).

Dismissal of a complaint for lack of standing is appropriate where, as here, the

complaint fails to sufficiently allege a “causal connection” showing that the injury

is “fairly traceable” to the allegedly wrongful conduct. Lujan, 504 U.S. at 560-61.

Appellant’s claims depend upon her allegations that she “has been

financially injured in that she has made over $60,000.00 in interest payments based

on manipulate [sic] market LIBOR.” (ER 691 ¶ 224; see also ER 672-3, 688.) But

contrary to Appellant’s conclusory allegation, and as the District Court correctly

found, the Note and Modification Agreement referenced in the TAC, as well as

Appellant’s own allegations, establish that Appellant never made a single payment

at a rate that was tied to LIBOR and, therefore, could not have been injured by the

Barclays Appellees’ alleged manipulation. (ER 13.)

First, Section 4(a) of the Note that Appellant executed on December

16, 2006 shows that the initial 8.775% rate was fixed for two years, until January

2009. (ER 2084 (Note).) This fact was further confirmed by Appellant’s own

expert who, in a declaration submitted in opposition to Deutsche Bank’s motion for

summary judgment, observed that the interest rate on Appellant’s Note is “fixed


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for two years” and does not become adjustable until “after the initial two years.”

(ER 2067.)

Second, in April 2008, long before the rate would become adjustable

under the Note, Appellant entered into a Modification Agreement that (i) fixed the

interest rate on her loan at 5.500% “[e]ffective on 04/01/2008,” (ii) established that

“[t]he date on which the interest change is next scheduled to occur changed to

04/01/2013,” and (iii) provided that Appellant’s fixed interest rate would not adjust

to an interest rate linked to LIBOR until April 1, 2013. (ER 695.) Thus, both the

Note and Modification Agreement make clear that Appellant’s interest rate would

not be based in any way on LIBOR until April 1, 2013, the date on which her fixed

interest rate was to change to a rate linked to LIBOR. (See id.) The District Court

properly considered both the Note and Loan Modification—which were referenced

in the TAC—and concluded that Appellant lacked Article III standing because

“neither [Appellant]’s original loan [n]or her Loan Modification Agreement have

yet required her to pay a monthly interest rate dependent on the LIBOR.

Therefore, any alleged manipulation of the LIBOR cannot have harmed

[Appellant].” (ER 17; see also ER 13 (“In short, [Appellant] could not have

suffered harm based on manipulation of the LIBOR because her interest rate was

never affected by the LIBOR.”).)


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Although Appellant spends a significant portion of her Opening Brief

arguing that she has properly alleged antitrust standing, the District Court based its

opinion on the threshold issue of whether Appellant had alleged Article III

standing and, therefore, did not reach the issue of whether Appellant had alleged

antitrust standing, which must be established in antitrust cases in addition to

Article III standing.2 Indeed, Appellant never properly alleges any injury at all.

Instead, Appellant baldly asserts that she sustained “damage” as a result of the

Barclays Appellees’ alleged manipulation of LIBOR. (Op. Br. at 59.) But

Appellant does not explain how she was injured by that alleged manipulation,

because, as a matter of undisputed fact (and simple logic), she could not have been

so injured. Instead, she alleges that she “was led to believe that her home loan

monthly mortgage payments were based on a LIBOR market interest rate based on

market factors outside of Barclay’s [sic] control and not by Barclay’s [sic]

manipulation.” (Id.) But that argument wholly misrepresents the undisputed facts

2 In any event, because Appellant has failed to establish an injury in fact, she has failed to establish an antitrust injury and, thus, antitrust standing, which is required for any claim under the Sherman Act. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977) (requiring not just injury in fact, but “injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful”). The District Court did not reach this issue because Appellant’s lack of Article III standing alone was and remains fatal to her Sherman Act claim.


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in the record—that Appellant never once made a single loan payment that was tied

to LIBOR—in an attempt to confuse the issues before this Court. (See pp. 5-8,

supra.) Such tactics cannot revive Appellant’s claims, which were properly

dismissed.

II. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT LACKED STANDING TO ASSERT HER CALIFORNIA STATUTORY CLAIMS.

The District Court also properly dismissed Appellant’s two claims

based on violations of California law for lack of statutory standing. California’s

Unfair Competition Law (“UCL”), CAL. BUS. & PROF. CODE § 17200 et seq.,

requires that Appellant allege sufficient facts to demonstrate that she “suffered

injury in fact and has lost money or property as a result of” the alleged unfair

business practice. Id. § 17204. That is, Appellant must establish that she suffered

a pecuniary injury “sufficient to constitute an ‘injury in fact’ under Article III of

the Constitution.” Rubio v. Capital One Bank, 613 F.3d 1195, 1203-04 (9th Cir.

2010) (citation omitted); see also Gonzalez v. Kinro, Inc., 473 Fed. App’x 768, 769

(9th Cir. 2012) (“Section 17204 of California’s Unfair Competition Law

incorporates the federal injury in fact standard.”). California’s False Advertising

Law (“FAL”), CAL. BUS. & PROF. CODE § 17500 et seq., has an identical statutory

standing requirement. Bower v. AT&T Mobility, LLC, 196 Cal. App. 4th 1545,

1555 (2011) (“Like Section 17200, Section 17500 requires an individual suing


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under the statute to have suffered injury in fact and to have lost money or property

as a result of such unfair competition.”) (citation and internal quotation omitted).

Appellant has failed to establish statutory standing under both the UCL and FAL.

Appellant’s principal alleged injury under the UCL and FAL is again

that she paid interest based on an allegedly manipulated LIBOR. (See ER 674-75

¶ 138(f) (UCL claim); see also ER 684-85 ¶¶ 181-182 (FAL claim).) But, as

explained supra, Appellant’s interest rate was never based on LIBOR because she

ceased making payments on her loan long before the first Interest Rate Change

Date was to occur. (See pp. 5-8, supra.) Appellant’s further allegations that she

was harmed by the purported “missing fax page scheme” are also contradicted by

the documents referenced in the TAC, as it is undisputed that the Modification

Agreement saved Appellant money by reducing her interest rate from 8.775% to

5.500% and reducing her monthly mortgage payment by roughly $800 (from

$3,817.13 to $3,027.02) through April 2013. (ER 661 ¶¶ 62-64, ER 695.)

Appellant also conceded in the TAC that the Modification Agreement cured her

then-existing default under her original Note. (See ER 660 ¶ 54 (“To cure the

default, plaintiff obtained a loan modification on April 7, 2008”).)

Although Appellant alleges that the purported “missing fax page

scheme” deprived her of notice of the change in her monthly payments in April

2013, the allegation fails to establish injury in fact for two reasons. (See ER 682


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¶ 165.) First, the documents referenced in the TAC show that she did in fact

receive notice on April 10, 2008, when she received the Modification Agreement

from HomEq. (ER 661 ¶ 63.) The Modification Agreement clearly discloses that

“[t]he date on which the New Monthly Payment change is next scheduled to occur

is hereby changed to 05/01/2013.” (ER 695 § 1(b).) Second, even if Appellant

sufficiently alleged nondisclosure of such notice (and she has not), she has not

alleged that she suffered any economic harm as a result, as is required under the

UCL and FAL. Rather, it is undisputed that Appellant defaulted on her modified

mortgage and declared bankruptcy in January 2010—more than three years before

her interest rate was to become linked to LIBOR under the Modification

Agreement.3

Appellant incorrectly suggests that she need not show economic

injury to state her UCL and FAL claims despite relying on a case that expressly

holds the opposite (see Op. Br. at 39): a UCL plaintiff “must demonstrate some

form of economic injury.” Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 323

(2011). Appellant states that “[t]he fact that the actual rate may have gone down or

3 Appellant’s attempt to circumvent the standing requirements of the UCL and FAL by citing United States v. Socony-Vacuum Oil Co., 310 US 150 (1940) is unavailing. Socony-Vacuum describes agreements that are per se illegal under the Sherman Act, and is completely unrelated to Appellant’s lack of statutory standing.


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up is irrelevant; what matters is that the rate was not independently determined.”

(Op. Br. at 42.) Appellant appears to be arguing that it is irrelevant whether the

alleged manipulation of LIBOR harmed or benefited her, suggesting that she need

not have suffered any economic loss in order to have UCL or FAL standing. But

the applicable law, which unequivocally requires a plaintiff to show economic

injury in order to establish standing, directly contradicts that contention. Kwikset,

51 Cal. 4th at 323; see also TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820,

825 n.1 (9th Cir. 2011) (holding UCL injury-in-fact standing is slightly narrower

than Article III standing because plaintiff must prove a “pecuniary injury” and

“immediate causation”). Because Plaintiff has failed to adequately allege any such

economic injury, the District Court properly dismissed Appellant’s UCL and FAL

claims for lack of standing.

III. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT’S FAL CLAIM WAS TIME BARRED.

Among other defects, Appellant’s FAL claim relating to the purported

“missing fax pages” scheme is barred by the statute of limitations. Actions for a

violation of the FAL are subject to a three-year statute of limitations. CAL. CIV.

PROC. § 338(a). Appellant alleges that the act of false advertising occurred on

April 10, 2008, when defendant purportedly faxed a defective copy of the loan

modification agreement. (ER 661 ¶ 63.) Because Appellant executed that

agreement on April 17, 2008 (id.), any claim would have accrued by that date.


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Appellant, however, filed this action on March 1, 2012, more than three years later.

On that ground, the District Court properly dismissed this claim as time barred.

(ER 14-15.) Further, Appellant has waived her right to contest this ruling by

failing to raise it on appeal. See Castro-Martinez v. Holder, 674 F.3d 1073, 1082-

83 (9th Cir. 2011) (declining to review an issue on appeal not raised in appellant’s

opening brief).

IV. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT’S AIDING AND ABETTING CLAIM FAILED FOR LACK OF A VIABLE PRIMARY TORT CLAIM.

The District Court properly dismissed Appellant’s claims against the

Barclays Appellees for aiding and abetting other Defendants’ purported violations

of the UCL on the grounds that Appellant failed to state a viable UCL claim

against any defendant in the action below. Because aiding and abetting the

commission of an intentional tort is a derivative claim, it requires the existence of a

primary tort claim. Casey v. U.S. Bank Nat’l Ass’n, 127 Cal. App. 4th 1138, 1144

(2005). The District Court properly determined that Appellant failed to state a

claim that (i) Appellee Deutsche Bank National Trust Company engaged in any

tortious conduct, and (ii) Appellee HomEq committed a tort by means of the

alleged “missing fax page” scheme. Without allegations sufficient to sustain her

primary tort claims, the District Court properly found that Appellant had no basis

for relief on her derivative aiding and abetting claim against the Barclays


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Appellees. (ER 16.) In any event, Appellant has waived her right to contest this

ruling by failing to raise it on appeal. See Castro-Martinez, 674 F.3d at 1082-83.

V. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT LACKED STANDING TO ASSERT HER CLAIMS FOR BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING.

Because Appellant’s breach of the covenant of good faith and fair

dealing claims rest on the same defective allegations that underlie all of her other

claims, the District Court properly dismissed those claims for lack of Article III

standing. See Kaing v. Pulte Homes, Inc., No. 09-5057, 2010 WL 625365, at *6

(N.D. Cal. Feb. 18, 2010) (dismissing with prejudice plaintiff’s California

covenant of good faith and fair dealing claim for failure to establish Article III

standing). Appellant attempts to sidestep this determination altogether and now

asks the Court to rule on the merits of this claim—a question not reached by the

District Court below. As a threshold matter, this issue is not properly before the

Court as it was not argued below. See Conservation Nw. v. Sherman, No.

11-35729, 2013 WL 1760807, at *6 (9th Cir. Apr. 25, 2013) (reaffirming the

Court’s rule “against entertaining arguments on appeal that were not presented or

developed before the district court”) (quotation omitted).

Moreover, in an attempt to argue the merits of her claim (on appeal of

a decision concerning solely her standing to bring it), Appellant inappropriately

advances a host of confusing new allegations never raised in the TAC. See Recinto


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v. U.S. Dep’t of Veterans Affairs, 706 F.3d 1171, 1176 n.3 (9th Cir. 2013)

(declining to consider allegations advanced for the first time on appeal).

Specifically, she appears to assert that Appellee HomEq violated federal

regulations promulgated under the Truth In Lending Act (“TILA”) when it

purportedly “hid the terms” of her mortgage and “made inconsistent

representations as to what those terms were (either adjustable or fixed).” (Op. Br.

at 55-56.) Appellant’s argument, insofar as it can be understood, seems to suggest

that this alleged TILA-related injury gives her Article III standing to bring a claim

for breach of the covenant of good faith and fair dealing, despite the fact that she is

not asserting a TILA claim. (Op. Br. at 56.) Not so. Appellant’s covenant claim

rests exclusively on the same defective allegations concerning LIBOR

manipulation and the “missing fax pages” scheme that fail to support Article III

standing for Appellant’s antitrust and state statutory claims. (ER 688 ¶¶ 207-09.)

The District Court properly dismissed her claim because she failed to plead, and

could not have pled, an injury in fact. Nothing that Appellant (improperly) argues

here for the first time alters that conclusion.

VI. THE DISTRICT COURT CORRECTLY CONCLUDED THAT APPELLANT FAILED TO PLEAD THE BASIC ELEMENTS OF COMMON LAW FRAUD.

Appellant’s failure to tie her purported injuries to any alleged conduct

by the Barclays Appellees also defeats her standing to bring her fraud claim. It


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further prevents Appellant from properly pleading “resulting damage”—an

essential element of a fraud action under California law. See Engalla v.

Permanente Med. Grp., Inc., 15 Cal. 4th 951, 974 (1997). Because her loan was

never tied to LIBOR, Appellant cannot show any type of damages whatsoever,

much less damages resulting from an alleged fraud.

CONCLUSION

For the reasons set forth above, the District Court’s order dismissing

Appellant’s claims should be affirmed.

Dated: July 1, 2013 Respectfully submitted,

/s/ Adam S. ParisAdam S. Paris SULLIVAN & CROMWELL LLP 1888 Century Park East, Suite 2100 Los Angeles, California 90067 (310) 712-6600 (telephone) (310) 712-8800 (facsimile) David H. Braff Yvonne S. Quinn Jeffrey T. Scott Matthew S. Fitzwater Matthew J. Porpora SULLIVAN & CROMWELL LLP 125 Broad Street New York, New York 10004 Tel: (212) 558-4000 Fax: (212) 558-3588


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BOIES, SCHILLER & FLEXNER LLP Jonathan D. Schiller [email protected] 575 Lexington Ave., 7th Floor New York, New York 10022 Telephone: 212.446.2300 Facsimile: 212.446.2350 David L. Zifkin [email protected] 225 Santa Monica Blvd., 11th Floor Santa Monica, California 90401 Telephone: 310.395.5800 Facsimile: 310.578.7898


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STATEMENT OF RELATED CASES

Appellees Barclays Bank PLC and Barclays Capital Real Estate Inc.,

d/b/a HomEq Servicing, are aware of no case currently pending before this Court

that may be deemed a related case under Ninth Circuit Rule 28-2.6.

Dated: July 1, 2013 /s/ Adam S. Paris ADAM S. PARIS


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CERTIFICATE OF COMPLIANCE

Pursuant to Rule 28.1(e)(2)(B) of the Federal Rules of Appellate

Procedure, counsel for Barclays Bank PLC and Barclays Capital Real Estate Inc.,

d/b/a HomEq Servicing, hereby certifies that the text of the enclosed brief is size

14-point Times New Roman font, and contains approximately 4,544 words

including footnotes. Counsel’s approximation is based on the “Word Count”

function of the program used to draft the enclosed brief.



CERTIFICATE OF SERVICE

I hereby certify that I electronically filed the Answering Brief of

Appellees Barclays Bank PLC and Barclays Capital Real Estate Inc., d/b/a HomEq

Servicing, with the Clerk of the Court for the United States Court of Appeals for

the Ninth Circuit by using the appellate ECF system on July 1, 2013. Counsel for

Appellant Helen Galope, who is a registered ECF user, will be served by the

appellate ECF system.



HELEN GALOPE AND HER ATTORNEY LENORE ALBERT THRILLED WITH OUTCOME OF THE NINTH CIRCUIT COURT OF...

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