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Harrington v. Home Capital Funding

March 2, 2009


The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge


Defendant Countrywide Home Loans, Inc. ("Countrywide"), erroneously sued as Countrywide Mortgage, Inc., has filed a motion to dismiss the First Amended Complaint for failure to state a claim. For the reasons discussed below, Countrywide's motion is GRANTED IN PART and DENIED IN PART.


In August 2005, Plaintiff refinanced her home mortgage and obtained a $616,000.00 loan from Home Capital Funding.*fn1 (Countrywide's Ex. 1.) The loan was secured by Plaintiff's residence located at 16470 Calloway Drive, San Diego, California 92127 (the "Property"). According to Plaintiff, Defendants are proceeding toward a trustee sale of the Property.

In her First Amended Complaint ("FAC"), Plaintiff alleges that the Truth-in-Lending Disclosure provided to her upon entering into the loan fails to disclose the index used to calculate the first 24 months of payments. (FAC ¶ 13.) Plaintiff further alleges that she was never provided a final closing statement, Credit Report Disclosure, or "Privacy Pledge" disclosure. (FAC ¶¶ 14-15.) In addition, Plaintiff "is informed and believes, that, Defendants [sic], HOME CAPITAL'S, employed notary signed and notarized Plaintiffs loan documents in her absence and without her prior authorization, and did so as part of a scheme to conceal from Plaintiff that the 30 year 'fixed rate' Mortgage she was induced into, was actually a 3 year Adjustable Rate Mortgage, (ARM)." (FAC ¶ 22.)

Plaintiff alleges that none of Defendants has the right to initiate foreclosure under the security instrument. (FAC ¶ 18.) Plaintiff states that Defendants have not shown that they are in possession of the original note and, therefore, are proceeding with their non-judicial foreclosure without any right under law. (FAC ¶¶ 19, 30.) Plaintiff also claims that Defendants added costs and charges to the payoff amount of the note that were not justified under the terms of the note and/or state and federal law. (FAC ¶ 31.)

Plaintiff asserts the following causes of action: (1) violation of the Truth In Lending Act ("TILA"), 15 U.S.C. § 1601 et seq.; (2) unfair debt collection practices; (3) predatory lending practices; (4) fraud - violation of Cal. Bus. & Prof. Code § 17200; and (5) declaratory relief. The FAC also includes a section titled "Application for Temporary Restraining Order and OSC Re Preliminary Injunction."


Under Fed. R. Civ. P. 8(a)(2), the plaintiff is required only to set forth a "short and plain statement" of the claim showing that plaintiff is entitled to relief and giving the defendant fair notice of what the claim is and the grounds upon which it rests. Conley v. Gibson, 355 U.S. 41, 47 (1957). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should be granted only where a plaintiff's complaint lacks a "cognizable legal theory" or sufficient facts to support a cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). When reviewing a motion to dismiss, the allegations of material fact in plaintiff's complaint are taken as true and construed in the light most favorable to the plaintiff. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Although detailed factual allegations are not required, factual allegations "must be enough to raise a right to relief above the speculative level." Bell Atlantic v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965 (2007). "A plaintiff's obligation to prove the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id.


Countrywide moves to dismiss Plaintiff's FAC for failure to state a claim. As discussed below, the Court grants Countrywide's motion as to all of Plaintiff's claims with the exception of Plaintiff's claim for rescission under the Truth In Lending Act ("TILA").

A. TILA Claims

Although the title of Plaintiff's first cause of action is "TILA Recission [sic]," Plaintiff actually seeks damages in addition to rescission. (FAC ¶ 38.)

Plaintiff has not stated a claim for damages under the TILA because Plaintiff has not pled detrimental reliance, an element of a TILA claim for actual damages. In re Smith, 289 F.3d 1155, 1157 (9th Cir. 2002). Plaintiff has not alleged that she would have sought and obtained a better interest rate. See Villasenor v. American Signature, Inc., 2007 WL 2025739 (N.D. Ill. July 9, 2007) (explaining that plaintiff was required to allege facts suggesting that he would have sought and obtained a lower price but for the ...

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