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Ricon v. Recontrust Co.

August 4, 2009

JOSE RICON, PLAINTIFF,
v.
RECONTRUST COMPANY; AMERICAN MORTGAGE NETWORK, INC.; DOES 1- 50, INCLUSIVE; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (MERS), DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER (1) GRANTING IN PART AND DENYING IN PART AMNET'S MOTION TO DISMISS (2) GRANTING AMNET'S MOTION TO STRIKE

Plaintiff Jose Ricon filed this action to prevent Defendants from completing a non-judicial foreclosure on Plaintiff's property. Presently, defendant American Mortgage Network, Inc. ("AmNet") moves to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure or, in the alternative, to strike the request for punitive damages. (Doc. Nos. 9, 10.) Plaintiff did not file an opposition and the motion is amenable to disposition without oral argument. Having considered the parties' submissions, the Court GRANTS IN PART and DENIES IN PART AmNet's motions for the following reasons.

BACKGROUND

On September 15, 2005, Plaintiff obtained a loan from AmNet to purchase his primary residence, identified as 437 Bluffview Road, Spring Valley, California 91997 ("the Property"). The loan was secured by a deed of trust on the Property, which was recorded with the San Diego County Recorder on September 16, 2005.

On December 5, 2008, a Notice of Default was recorded against the Subject Property. A Notice of Trustee sale was recorded on March 17, 2009.

Plaintiff initially filed this action in state court, alleging various federal and state causes of action: (1) intentional misrepresentation; (2) negligent misrepresentation; (3) breach of fiduciary duty; (4) unfair debt collection practices; (5) predatory lending practices; (6) quiet title; (7) declaratory relief; (8) injunctive relief; and (9) accounting. (Doc. No. 1.) On May 1, 2009, Defendants removed this action from state court and, on June 5, 2009, AmNet filed the instant motions.

LEGAL STANDARD

I. Motion to Dismiss

A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Generally, to avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations; rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S.544 (2007). However, allegations of fraud must meet the particularity requirements of Rule 9(b): "a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b).

The court's review of a 12(b)(6) motion is limited to the contents of the complaint, accepting all factual allegations as true and drawing all reasonable inferences in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir.1996). Notwithstanding this deference, it is improper for a court to assume "the [plaintiff] can prove facts which [he or she] has not alleged." Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983). Furthermore, a court need not credit conclusory legal allegations cast in the form of factual allegations, unwarranted deductions of fact, or unreasonable inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

II. Motion to Strike

Rule 12(f) permits the court to strike any "insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). Motions to strike are a drastic remedy and generally disfavored. 5C Wright & A. Miller, Federal Practice and Procedure §1380 (3d ed. 2004). A matter is impertinent if the statements do not pertain, and are not necessary, to the issues in question. Fantasy, Inc.v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) rev'd on other grounds 510 U.S. 517 (1994). "Scandalous" matters "casts a cruelly derogatory light on a party or other person." In re 2TheMart.com, Inc. Sec. Litig., 114 F. Supp. 2d 955, 965 (C.D. Cal. 2000); see, e.g. AlvaradoMorales v. Digital Equip. Corp., 843 F.2d 613 (1st Cir. 1988) (striking the terms "brainwashing" and "torture" in a tort case in the employment context). "Motions to strike an affirmative defenses are generally disfavored, but the court may properly grant them when the defense is insufficient as a matter of law." Multimedia Patent Trust v. Microsoft Corporation, 525 F. Supp. 2d 1200, 1211 (S.D. Cal. 2007).

BACKGROUND

I. Motion to Dismiss

A. Claims One & Two: Intentional Misrepresentation and Negligent Misrepresentation

Plaintiff alleges Defendants "falsely represented that they had the right to payment under a note executed by Plaintiff" and "had the right to foreclose the Trust Deed." (Notice of Removal, Doc. No. 1., Ex. A. at 9.) Plaintiff contends Defendants did not actually possess a note secured by the Property, were not holders of a note that substantiates their claim, and were not non-holders of a note entitled to payment. Id. at 9-10. Further, Defendants alleged falsely represented the payoff amount required to redeem the Property by including unjustified costs and charges. Id. at 10. Plaintiff alleges he relied on these representations, which made it impossible for him to determine the actual amount due, causing him to suffer the potential loss of his home. Id. at 10-11.

i. Defendant's Argument

AmNet argues Plaintiff fails to state a claim and, alternatively, fails to meet Rule 9(b)'s specificity requirement. In support of its Rule 12(b)(6) argument, AmNet argues an allegation that a trustee did not have the original note is insufficient to render the proceeding invalid; therefore, there was no misrepresentation. Tina v. Countrywide Home Loans, 2008 U.S. Dist. LEXIS 88302, *21 (S.D. Cal. October 30, 2008).

In support of its Rule 9(b) argument, AmNet contends Plaintiff failed to distinguish between defendants, citing DiVittorio v. Equidyne Extractive Indus., 822 F.2d 1242, 1247 (2d Cir. 1987) ("[W]here multiple defendants are asked to respond to allegations of fraud, the complaint should inform each defendant of the nature of his alleged participation in the fraud."). AmNet notes Plaintiff directs all of his fraud allegations at "all Defendants." In addition, AmNet argues Plaintiff fails to allege the "who, what, when, where, ...


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