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Watts v. Countrywide Home Loans

March 9, 2009


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


On October 9, 2008, Plaintiff Eva L. Watts ("Plaintiff") originally filed a complaint in the Superior Court of the State of California, County of San Diego, raising claims arising out of a mortgage loan transaction. (Doc. No. 1, Exh. A, "Complaint.") The proceeds of the loan were used to purchase Plaintiff's principal dwelling (the "Property"), which is now subject to non-judicial foreclosure . Following service of the Summons and Complaint, Defendant Countrywide Home Loans, Inc. ("Countrywide") timely removed the action to federal court on January 12, 2009. (Doc. No. 1.) On January 20, 2009, Defendants Countrywide and Mortgage Electronic Registration Systems, Inc. ("MERS") submitted the pending motion to dismiss under Fed.R.Civ.P. ("Rule") 12(b)(6). ("Mot.," Doc. No. 5.) Defendant Saxon Mortgage Services, Inc. ("Saxon" and collectively with Countrywide and MERS, "Defendants") joined the motion by notice dated January 30, 2009.*fn1 (Doc. No. 7.) It does not appear Defendant Decision One Mortgage Company ("Decision One") has been served in this action.

Under the Civil Local Rules, Plaintiff's response to the motion was due on or before February 6, 2009. See Civ.L.R. 7.1(e)(2). To date, Plaintiff has neither filed an opposition nor sought additional time to do so. On February 11, 2009, Defendants filed a reply requesting the motion be granted based on Plaintiff's non-opposition. (Doc. No. 9.) 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 Plaintiff's failure to respond, the court reviews the motion on the merits to ensure dismissal is appropriate. Pursuant to Civ.L.R. 7.1(d), the matter was taken under submission by the court on February 20, 2009.


According to the Complaint, Decision One offered Plaintiff a home mortgage loan to finance the purchase of the Property and the loan closed on August 7, 2006. (Compl. at ¶¶ 12, 26.) Plaintiff later defaulted on the loan, leading to entry of a Notice of Default on September 2, 2008. (Compl. at ¶ 35.) The present status of any pending or completed sale is unclear from the parties' submissions. Plaintiff assert 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, negligence, cancellation based on impossibility, and slander of title. Plaintiff seeks injunctive relief (labeled as a "first cause of action"), damages, attorneys' fees and costs, declaration that the loan and Deed 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 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, as Defendants note, the Complaint relates almost no facts demonstrating any wrongs by particular defendants, but rather ascribes nearly all allegations collectively to "Defendants." Outside the section identifying the parties, Countrywide is mentioned only as assignee of a "beneficial interest" in the loan and having "approved loans with higher and higher debt-to-income...ratios" to "expand market share." (Compl. at ¶¶ 24, 35.) MERS is mentioned only once, as "the current but unascertained beneficiary of the Deed of Trust." (Compl. at ¶ 95.) These averments are insufficient to state a claim on Plaintiff's behalf. Further, Plaintiff has not specified which claims are brought against which defendants for what conduct. Rather, Plaintiff simply asserts all defendants are acting in concert and therefore alleges all claims indiscriminately. This "shotgun" approach does not meet the Rule 8 pleading standard. While this failing alone warrants dismissal of the Complaint, the motion's substantive arguments are addressed in the following sections.

B. RICO and Fraud

Countrywide and MERS argue Plaintiff's fraud and RICO causes of action must be dismissed because they have not been pled with particularity with respect to any defendants, as required by Rule 9(b). (Mot. at 7-10.) 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 ...

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