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Feliciano v. Washington Mutual Bank

August 3, 2009


The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge


This matter is before the court on defendant California Reconveyance Company's ("defendant") motion to dismiss pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). Plaintiffs Virgilio and Daisy Feliciano ("plaintiffs") oppose the motion. For the reasons set forth below, defendant's motion to dismiss pursuant to Rule 12(b)(6) is DENIED in part and GRANTED in part.*fn1


Plaintiffs entered into a mortgage loan transaction ("loan"), including a Deed of Trust and securing Note, which was signed and closed on or about August 22, 2007. (Pl.'s Compl. at ¶¶ 14-15.) Plaintiffs allege that they were not lawfully provided with the following loan documents: Good Faith Estimate; HUD1 Settlement Statement; Loan Application; Escrow Statements; Adjustable Rate Rider(s); Handbook on Adjustable Rate Mortgages; HUD Brochures; Right to Cancel; Variable Rate Disclosure; Private Mortgage Insurance Disclosure; Broker's Arrangements; Disbursal Disclosures; Finance Charge Itemization Disclosure; Equal Credit Opportunity Act Disclosure; Fair Housing Act Disclosure; Privacy Disclosure; Patriot Act Disclosure; Loan Servicing Disclosure Statement; Consumer Credit Score Disclosure; California Per Diem Interest Disclosure. (Id. at ¶ 21.)

Plaintiffs allege they were induced to enter into the loan in an improper form and manner and without the proper opportunity to evaluate costs and implications in violation of the Truth in Lending Act ("TILA"). (Id. at ¶ 22.) Plaintiffs assert that the failure to accurately and effectively disclose a Truth in Lending Disclosure Statement with effective Rescission Notices was a failure to provide a "material disclosure" as defined under 15 U.S.C. § 1602(u) and Reg. Z § 226.23(a)(3). (Id. at ¶ 23.) Plaintiffs also claim defendants ratified the loan with an improper, ineffective, and unlawful omission of "material disclosures" as defined under the same statutes. (Id. at ¶ 24.)

Plaintiffs allege that on or about March 28, 2009, they received a "Notice of Default and Election to Sell Under Deed of Trust," attached as Exhibit 1 to the Complaint. (Id. at ¶ 25.) Plaintiffs claim they have not received effective nor timely communications as provided by the California Civil Code and the Federal Debt Collection Practices Act ("FDCPA"). (Id. at ¶ 27.) Plaintiffs allege that Exhibit 1 represents attempts to collect a purported debt and threaten imminent legal proceedings contrary to California Civil Code and induces confusion as to source and sponsorship of the title to the Property and non-judicial foreclosure services. (Id. at ¶¶ 28-29.) They further allege that Exhibit 1 was filed using intentionally false, misleading, and deceptive conduct with respect to debt collection. (Id.) Plaintiffs claim that these attempts to collect fail to identify the "true owner" of the obligation, fail to identify the "real party," and fail to provide legal "standing" to "enforce contractual obligation." (Id. at ¶ 31.) Plaintiffs also allege that none of the defendants are "actual note holders" or "holders in possession" of the alleged indebtedness. (Id. at ¶ 32.)

Plaintiffs claim they have a continuing right to rescind the loan until the third business day after receiving both the proper Notice of Right of Rescission and delivery of all the "material disclosures," made in a form the plaintiffs may keep pursuant to 15 U.S.C. § 1635(a) and Reg. Z § 226.23(a). (Id. at ¶ 33.) Plaintiffs further contend the three-day right to rescind is statutorily extended due to the "material failures." (Id.) Plaintiffs allege that a "controversy" has arisen due to defendants' failure to provide accurate "material disclosures," and accordingly, they may tender any balance and extinguish the loan by operation of law. (Id. at ¶ 34.) Plaintiffs further allege the foregoing acts and material omissions by defendants were undertaken willfully, persistently, intentionally, knowingly, and/or in gross or reckless disregard of plaintiffs' disclosure rights, and as a result, plaintiffs have suffered nausea, emesis, constant headaches, insomnia, embarrassment, and have incurred an ascertainable loss. (Id. at ¶¶ 35-36.)


On a motion to dismiss, the allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). The court is bound to give the plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). Thus, the plaintiff need not necessarily plead a particular fact if that fact is a reasonable inference from facts properly alleged. See id.

Nevertheless, it is inappropriate to assume that the plaintiff "can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Calif., Inc. v. Calif. State Council of Carpenters, 459 U.S. 519, 526 (1983). Moreover, the court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). Indeed, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)(citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

In ruling upon a motion to dismiss, the court may consider only the complaint, any exhibits thereto, and matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. of Mary Hospital, 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. Consumers Union of United States, Inc., 12 F. Supp.2d 1035, 1042 (C.D. Cal. 1998).

Ultimately, the court may not dismiss a complaint in which the plaintiff alleged enough facts to "state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Only where a plaintiff has failed to "nudge [his or her] claims across the line from conceivable to plausible," is the complaint properly dismissed. Id. at 1952. When there are well-pleaded factual allegations, "a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 1950.


A. TILA ...

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