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Cataulin v. Plaza Home Mortgage

March 9, 2009

ROSALITO VIDAL CATAULIN AND VIRGINIA DELINO CATAULIN, PLAINTIFFS,
v.
PLAZA HOME MORTGAGE, GMAC MORTGAGE, LLC, AND MORTGAGE ELECTRONIC WASHINGTON MUTUAL BANK, SFB; REGISTRATION SYSTEMS, INC. PLAZA HOME MORTGAGE, INC., A CALIFORNIA CORPORATION; GMAC MORTGAGE, LLC, A DELAWARE LIMITED LIABILITY COMPANY; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., A SUSPENDED CALIFORNIA CORPORATION; AND DOES 1 THROUGH 50, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge

ORDER GRANTING MOTIONS TO DISMISS BY DEFENDANTS Doc. Nos. 3 and 5

On October 27, 2008, Plaintiffs Rosalito Vidal Cataulin and Virginia Delino Cataulin ("Plaintiffs") filed a complaint in the Superior Court of the State of California for the County of San Diego, raising claims arising out of a mortgage loan transaction. (Doc. No. 1, Exh. 1, "Complaint.") The proceeds of the loan were used to purchase a rental property (the "Property") which is now subject to non-judicial foreclosure. Following service of the Summons and Complaint, Defendant Plaza Home Mortgage, Inc. ("Plaza") timely removed the action to federal court on December 30, 2008. (Doc. No. 1.) On January 7, 2009, Plaza submitted a motion to dismiss under Fed.R.Civ.P. ("Rule") 12(b)(6) challenging only Plaintiffs' second claim for fraud and seventh claim for cancellation based thereon. ("Plaza Mot.," Doc. No. 3.) Independently, Defendants GMAC Mortgage, LLC ("GMAC") and Mortgage Electronic Registration Systems, Inc. ("MERS") filed a second motion to dismiss against all claims. ("GMAC Mot.," Doc. No. 5.) Plaza joined the GMAC Motion by notice dated January 20, 2009.*fn1 (Doc. No. 6.) It does not appear Defendant Washington Mutual Bank, SFB ("WaMu") has been served in this action.

Under the Civil Local Rules, Plaintiffs' responses to the Plaza and GMAC motions were due on or before January 23, 2009 and February 6, 2009, respectively. See Civ.L.R. 7.1(e)(2). To date, Plaintiffs have filed no oppositions nor sought additional time to do so. On January 29, 2009, Plaza filed a reply requesting its motion be granted based on Plaintiffs' non-opposition. (Doc. No. 7.) When an opposing party does not file papers in the manner required by Civ.L.R. 7.1(d)(2), the court may deem the failure to "constitute a consent to the granting of a motion or other request for ruling by the court." Civ.L.R. 7.1(f)(3)(c). Notwithstanding Plaintiffs' failure to respond, the court reviews both motions on the merits to ensure dismissal is appropriate. Pursuant to Civ.L.R. 7.1(d), these matters were taken under submission by the court without oral argument.

Discussion

According to the Complaint, on or about November 29, 2006, Plaintiffs were provided with 100% financing for the Property through two loans, the first for $524,000 by Plaza and WaMu and the second for $131,000 by Plaza and GMAC. (Compl. at ¶ 14.) Although not expressly alleged, it appears Plaintiffs later defaulted on the loans, leading to recordation of a Notice of Default and a Notice of Trustee's Sale. (Compl. at ¶ 74.) The present status of any pending or completed sale is unclear from the parties' submissions. Plaintiff alleges federal causes of action under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO"), the Truth in Lending Act, 15 U.S.C. § 1601 et seq. ("TILA"), and the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. ("RESPA"). Plaintiff also raises state law claims to quiet title and for fraud, negligent infliction of emotional distress, cancellation based on fraud and impossibility, and slander of title. Plaintiff seeks injunctive relief (labeled as a "first cause of action"), damages, attorneys' fees and costs, declaration that the loans and Deeds of Trust are null and void, and rescission.

I. Legal Standards

A motion to dismiss under Rule 12(b)(6) challenges the legal sufficiency of the pleadings. De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). In evaluating the motion, the court must construe the pleadings in the light most favorable to the plaintiff, accepting as true all material allegations in the complaint and any reasonable inferences drawn therefrom. See, e.g., Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003). While Rule 12(b)(6) dismissal is proper only in "extraordinary" cases, the complaint's "factual allegations must be enough to raise a right to relief above the speculative level...." U.S. v. City of Redwood, 640 F.2d 963, 966 (9th Cir. 1981); Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007) (allegations must provide "plausible grounds to infer" that plaintiff is entitled to relief). The court should grant 12(b)(6) relief only if the complaint lacks either a "cognizable legal theory" or facts sufficient to support a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

Where a plaintiff sues multiple defendants and sets forth multiple causes of action, he "must allege the basis of his claim against each defendant to satisfy Federal Rule of Civil Procedure 8(a)(2), which requires a short and plain statement of the claim to put defendants on sufficient notice of the allegations against them." Gauvin v. Trombatore, 682 F.Supp. 1067, 1071 (N.D.Cal. 1988). Even absent other pleading deficiencies, such "confusion of which claims apply to which defendants would require that the complaint be dismissed with leave to file an amended complaint." Gen-Probe, Inc. v. Amoco Corp., 926 F.Supp. 948, 961 (S.D.Cal. 1996)(citing Gauvin, 682 F.Supp. at 1071.) "Specific identification of the parties to the activities alleged is required...to enable the defendant[s] to plead intelligently." Van Dyke Ford, Inc. v. Ford Motor Co., 399 F.Supp. 277, 284 (E.D.Wis. 1975).

II. Analysis

A. Failure of the Pleadings to Allege Facts Sufficient to Survive a Rule 12(b)(6) Motion to Dismiss

As a first consideration, the Complaint presents almost no facts demonstrating any wrongs by particular defendants, but rather ascribes nearly all allegations collectively to "Defendants." Outside the section identifying the parties, neither GMAC nor Plaza is mentioned at all, and MERS is mentioned only as having caused both a Notice of Default a Notice of Trustee's Sale to be recorded against the Property. (Compl. at ¶¶ 73-74.) These averments are insufficient to state a claim on Plaintiffs' behalf. Further, Plaintiffs have in no way specified which claims are brought against which defendants for what conduct. Rather, Plaintiffs simply assert all defendants are acting in concert and therefore allege all claims indiscriminately. This "shotgun" approach does not meet the Rule 8 pleading standard. While this failing alone warrants dismissal of the Complaint, the parties' substantive arguments are addressed in the following sections.

B. RICO and Fraud

Defendants argue Plaintiffs' fraud and RICO causes of action must be dismissed because they have not been pled sufficiently with respect to the required elements or the specific defendants. (Plaza Mot. at 5-7; GMAC Mot. at 3-4, 6.) The court agrees.

"Rule 9(b)'s particularity requirement applies to state-law causes of action." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). On a claim for fraud, then, a "pleading is sufficient under rule 9(b) if it identifies the circumstances constituting fraud so that a defendant can prepare an adequate answer from the allegations." Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989)(citations omitted). "While statements of the time, place and nature of the alleged fraudulent activities are sufficient, mere conclusory allegations of fraud" are not. Id. Further, Rule 9(b) requires a plaintiff to attribute particular fraudulent statements or acts to individual defendants. Id. Here, ...


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