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Maxwell v. Union Fidelity Mortgage

February 18, 2009


The opinion of the court was delivered by: Oliver W. Wanger United States District Judge



Plaintiff Samuel Maxwell's ("Maxwell") complaint arises out of a home mortgage refinance transaction he contends he entered into with Defendants Union Fidelity Mortgage, Inc., Erin Reilly, and Randolph Martin ("Union Defendants") in June 2007 for approximately $358,000. The loan was subsequently purchased by Defendant MortgageIT, Inc. ("MortgageIT"). Plaintiff alleges Defendants failed to disclose and knowingly misrepresented key terms of the loan, including the interest rate and finance charges, in violation of the federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and California's unfair competition law ("UCL"), codified at California Business and Professions Code § 17200 et seq. He also alleges state common law supplemental claims solely against the Union Defendants: breach of fiduciary duty, fraud, and financial abuse of an elder.

Before the court for decision are Defendant MortgageIT's motion to dismiss, motion for a more definite statement, and motion to strike. Defendant moves to dismiss Plaintiff's TILA claim pursuant to Fed. R. Civ. P. 12(b)(6) on the ground that the complaint contains only general allegations that are insufficient to state a TILA violation. In the alternative, Defendant moves for a more definite statement pursuant to Fed. R. Civ. P. 12(e). Defendant also moves to dismiss the UCL claim pursuant to Fed. R. Civ. P. 12(b)(6). Finally, MortgageIT moves to strike Plaintiff's TILA claim for rescission pursuant to Fed. R. Civ. P. 12(f) on the ground that Plaintiff has failed to first notify the lender of his intent to rescind as required under the TILA.


In June 2007, Plaintiff entered into a written loan contract with Union Fidelity Mortgage, Inc. for $358,000 secured by Plaintiff's home in Fresno, California. Plaintiff alleges the Union Defendants failed to make disclosures required under the TILA, failed to provide Plaintiff with copies of the required disclosures, and misrepresented the terms of the loan, including the interest rate, finance charges, and total amount financed. Plaintiff asserts that the Union Defendants falsely represented that the loan would be in his best interests, that the payments would be affordable for him, and that he would be better off financially as a result. Instead, Plaintiff contends the loan caused him financial detriment and was beyond his ability to pay, putting him in danger of losing his house and causing him considerable emotional distress.

Plaintiff filed his complaint in the Superior Court of California, County of Fresno, on May 6, 2008. (Doc. 5-2.) Defendant MortgageIT was served on August 5, 2008 and removed the action to federal court on September 5, 2008. (Doc. 5.) On September 11, 2008, Defendant MortgageIT filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a motion for a more definite statement pursuant to Fed. R. Civ. P. 12(e), and a motion to strike pursuant to Fed. R. Civ. P. 12(f). (Docs. 9 & 10.) Plaintiff filed oppositions to all the motions on November 7, 2008. (Docs. 13 & 14.) MortgageIT filed its reply briefs on November 17, 2008. (Docs. 15 & 16.)


A. Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6)

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint. Novarro v. Black, 250 F.3d 729, 732 (9th Cir. 2001). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, it is required to contain "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65 (2007); see also Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997) (issue is not whether plaintiff will ultimately prevail, but whether claimant is entitled to offer evidence to support the claim). Dismissal is warranted under Rule 12(b)(6) where the complaint lacks a cognizable legal theory or where the complaint presents a cognizable legal theory yet fails to plead essential facts under that theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). In deciding a motion to dismiss, the court accepts as true all material factual allegations in the complaint and construes them in the light most favorable to the plaintiff. See Newman v. Sathyavaglswaran, 287 F.3d 786, 788 (9th Cir. 2002).

The court need not accept as true allegations that contradict facts which may be judicially noticed. See Mullis v. United States Bankruptcy Ct., 828 F.2d 1385, 1388 (9th Cir. 1987). For example, matters of public record may be considered, including pleadings, orders, and other papers filed with the court or records of administrative bodies, see Mack v. South Bay Beer Distributors, Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), while conclusions of law, conclusory allegations, unreasonable inferences, or unwarranted deductions of fact need not be accepted. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see also Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994) ("[A] document is not 'outside' the complaint if the complaint specifically refers to the document and if its authenticity is not questioned."). Allegations in the complaint may be disregarded if contradicted by facts established by exhibits attached to the complaint. Sprewell, 266 F.3d at 988. Thus when ruling on a motion to dismiss, the court may consider facts alleged in the complaint, documents attached to the complaint, documents relied upon but not attached to the complaint when authenticity is not contested, and matters of which the court may take judicial notice. Parrino v. FHP, Inc., 146 F.3d 699, 705-06 (9th Cir. 1988).

B. Motion for a More Definite Statement Pursuant to Fed. R. Civ. P. 12(e)

Federal Rule of Civil Procedure 12(e) provides:

which is so vague or ambiguous that the party cannot pleading to which a responsive pleading is allowed but A party may move for a more definite statement of a before filing a responsive pleading and must point out reasonably prepare a response. The motion must be made the defects complained of and the details desired. If the court orders a more definite statement and the order is not obeyed within 10 days after notice of the strike the pleading or issue any other appropriate order or within the time the court sets, the court may order.

A Rule 12(e) motion for a more definite statement must be considered in light of the liberal pleading standards of Rule 8(a) in federal court. See Bureerong v. Uvawas, 922 F.Supp. 1450, 1461 (C.D. Cal. 1996) (citing Sagan v. Apple Computer, Inc., 874 F.Supp. 1072, 1077 (C.D. Cal. 1994)) ("Motions for a more definite statement are viewed with disfavor and are rarely granted because of the minimal pleading requirements of the Federal Rules."). Under the liberal pleading standards, "pleadings in the federal courts are only required to fairly notify the opposing party of the nature of the claim." A.G. Edwards & Sons, Inc. v. Smith, 736 F.Supp. 1030, 1032 (D. Ariz. 1989).

A Rule 12(e) motion is proper only if the complaint is so indefinite that the defendant cannot ascertain the nature of the claim being asserted, meaning the complaint is so vague that the defendant cannot begin to frame a response. See Famolare, Inc.

v. Edison Bros. Stores, Inc., 525 F.Supp. 940, 949 (E.D. Cal. 1981); Boxall v. Sequoia Union High Sch. Dist., 464 F.Supp. 1104, 1114 (N.D. Cal. 1979). The motion must be denied if the complaint is specific enough to notify defendant of the substance of the claim being asserted. San Bernardino Pub. Employees Ass'n v. Stout, 946 F.Supp. 790, 804 (C.D. Cal. 1996) ("A motion for a more definite statement is used to attack unintelligibility, not mere lack of detail, and a complaint is sufficient if it is specific enough to apprise the defendant of the substance of the claim asserted against him or her."). The motion should be denied if the detail ...

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