The opinion of the court was delivered by: William Q. Hayes United States District Judge
The matter before the Court is the Motion to Dismiss (Doc. # 3) filed by Defendant Aurora Loan Services.
On January 15, 2008, Plaintiff initiated this action by filing the Complaint in the Superior Court of California, County of San Diego. On February 19, 2009, Defendants removed the Complaint to this Court (Doc. # 1). The Complaint alleges that "Plaintiff intends this action and this document to represent a formal complaint and also act as a qualified written request" that Defendants provide Plaintiff an opportunity to inspect all documents related to a loan on Plaintiff's property, which is the subject of this action. Complaint, ¶ 6.
A. Factual Allegations in the Complaint
Plaintiff is the owner of real property located at 568 Glenheather Drive, San Marcos, CA 92069 (the "Property"). On or about June 17, 2009, Plaintiff obtained a loan (the "Loan") on the Property from Defendant Equity 1 Lenders Group ("Equity").
Prior to the funding of the Loan, Defendant Pacific Mortgage Consultants ("Pacific") and/or Equity "represented to Plaintiff that very favorable loans, loan terms and interest rates were available to him." Id., ¶ 14. "As a result, [Pacific], Equity and others convinced Plaintiff to refinance the loan on the Subject Property and take on a new loan with Equity." Id. The "Loan was not as represented because among other things" the interest rate and payments were higher than represented, there was less equity in the subject property than represented, there was less money available to Plaintiff than represented, and the loan was unaffordable to Plaintiff. Id., ¶15. "Pacific, Equity and Defendants knew or intended that Plaintiff receive a worse loan, and  the worse loan produced a higher commission for them because it was at a higher interest rate and subject to higher fees." Id., ¶ 14."Pacific, Equity and Defendants knew or should have known that in the event of Plaintiff's inability to perform on the Loan, prepayment penalties, commissions and other foreseeable charges to Plaintiff would constitute an additional payment stream to the benefit of Defendants." Id.
"Defendants" failed to provide Plaintiff proper notice of the right to cancel at the time of the transaction or subsequent to the time of the transaction. Id., ¶ 16. Defendants failed to provide accurate disclosures of the costs of financing, the APR, the payment obligations, or the type of loan at the time of the transaction. "Defendants provided Plaintiff with multiple different sets of loan documents and disclosures all of which rendered it impossible for Plaintiff to understand the effective terms of the Loan and rendered his obligations incomprehensible to Plaintiff." Id. The "Loan and related contracts contain conflicting terms that are not reasonably amenable to understanding by a consumer." Id., ¶ 17.
Subsequent to the funding of the Loan, Defendant Aurora Loan Services ("Aurora") "enticed [Plaintiff] to make payments on the loan in a purported work-out, accommodation, or loan modification based on promises that if he made payments, he would be able to obtain a more favorable loan, but [Aurora] did not in fact intend to offer beneficial alternative terms." Id., ¶ 24. After Plaintiff made additional payments in reliance on Aurora's promises, Aurora did not offer beneficial terms.
Aurora "and other Defendants purchased or otherwise acquired unknown rights and/or responsibilities relating to Plaintiff's Loan from Equity at some date unknown to Plaintiff." Id., ¶ 20. "Pacific, Equity, [Aurora], [and] other Defendants knew or should have known that all rights and title claimed under the Loan and any related Note or Trust Deed were wrongfully obtained and were invalid and that any such rights and title or claims thereto were of no legal force." Id., ¶ 23.
The Complaint alleges causes of action for (1) violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. section 2605, et seq.;(2) violation of the Truth in Lending Act ("TILA"), 15 U.S.C. section 1601, et seq.;(3) violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. section 1692, et seq.;(4) violation of the Rosenthal Fair Debt Collection Practices Act ("RFDCPA"), Cal. Civ. Code. section 1788, et seq.; (5) negligent misrepresentation; (6) fraud; (7) rescission; (8) unjust enrichment; and (9) quiet title.
In support of the first cause of action for violation of RESPA, the Complaint alleges that "Defendants Pacific, Equity, [Aurora] and other Defendants failed to adequately respond to Plaintiff's requests for information regarding the loan and for an opportunity to work out the loan Qualified Written Requests;" and "failed to adequately respond to Plaintiff's Qualified Written Requests." Id., ¶¶ 30-31. The Complaint alleges that "Defendants Equity, and their predecessors and other Defendants were required to give Plaintiff notice of transfer and the required sixty (60) days after the transfer period before assessing a late fee," but that "Defendants Equity, [Aurora] and other Defendants improperly imposed a late fee on Plaintiff within sixty (60) days of the Loan transfer." Id., ¶¶ 32-33. The Complaint alleges that Defendants violated RESPA at the time the loan was originated because "Defendants delivered multiple RESPA disclosures which were different, misleading and deceptive, and which were inconsistent and incorrect." Id., ¶ 34.
In support of the second cause of action for violation of TILA, the Complaint alleges that "Defendants violated 15 U.S.C. § 1635(a) and Regulation Z § 226.23(b) with regards to the required notices and disclosures at the initiation of the loan by failing to provide required documentation and/or by providing incomplete or misleading documentation to Plaintiff." Id., ¶ 38. The Complaint alleges that Defendants failed to correctly identify the transaction; failed to clearly and conspicuously disclose Plaintiff's right to rescind the transaction three days after delivery of all required disclosures; and failed to disclose how to exercise the right to rescind, the effects of rescission, and the date the rescission period expired. The Complaint alleges that "[m]ultiple different and inconsistent TILA disclosures were provided allowing Defendants to mislead, confuse Plaintiff as to the applicable terms and obligations of the Loan." Id., ¶ 39.
In support of third cause of action for violation of the FDCPA, the Complaint alleges that "Pacific, Equity and [Aurora] violated the FDCPA subsequent to the time of origination by among other things obtaining payments from Plaintiff based on promises of reasonable and beneficial loan modification, without actually providing such modifications." Id., ¶ 42.
In support of the fourth cause of action for violation of the RFDCPA, the Complaint alleges that "the practices alleged also violate the Rosenthal Act and entitle Plaintiff to the remedies permissible thereunder." Id., ¶ 45.
In support of the fifth cause of action for negligent misrepresentation, the Complaint alleges that "[i]f any Defendants' misrepresentations made herein were not intentional, said misrepresentations were negligent." Id., ¶ 47. The Complaint alleges that Defendants had no reasonable ground for believing their representations with respect to the Loan to be true. The Complaint alleges that "Defendants made these misrepresentations with the intention of inducing Plaintiff to act in reliance on these representations," and that "[a]s a proximate result of the negligent misrepresentations of Defendants . . . the Plaintiff sustained damages." Id., ¶ 49.
In support of the sixth cause of action for fraud, the Complaint alleges that "Defendants made various misrepresentations of material fact . . . with respect to the period of the mortgages, the interest rates and other terms of the mortgages." Id., p. 11, ¶ 2. The Complaint alleges that "Pacific, Equity, [Aurora] variously misinformed Plaintiff regarding the terms of the Loan as alleged herein so that Plaintiff would refinance and so that they could cause Plaintiff to agree to the Loan." Id., p. 11, ¶ 4. The Complaint alleges that the misrepresentations were made with the intent to induce Plaintiff's reliance; that Plaintiff in fact relied on the misrepresentations; and that Plaintiff suffered damages as a result of the alleged misrepresentations.
In support of the seventh cause of action for rescission, the Complaint alleges that "Plaintiff is informed and believes that Defendants do not have and cannot produce and original deed and an original note relating to the Loan," and that "Plaintiff had a continuing right to rescind the transaction until the third business day after receiving both a proper and accurate cancellation rights notice and all material disclosures . . ...