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Serrano v. Security National Mortgage Co.

August 14, 2009


The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court



On July 6, 2009, Defendant Aurora Loan Services filed a motion to dismiss Plaintiff's Complaint and a motion to strike portions of the Complaint. (Doc. Nos. 3, 4.) Under Local Civil Rule 7.1(e)(2), Plaintiff's opposition to the motion to dismiss was due no later than August 3, 2009. Plaintiff has submitted no opposition. The Court concludes that this matter is appropriate for resolution without oral argument and submits Defendant's motion to dismiss on the papers under Local Civil Rule 7.1(d)(1). For the following reasons, the Court grants in part Defendant's motion to dismiss. The Court dismisses Plaintiff's Complaint and grants leave to amend. Plaintiff may file an amended complaint curing the noted deficiencies no later than September 14, 2009. The Court denies as moot Defendant's motion to strike.


Plaintiff Arvin Serrano is the owner of real property located at 712 Baylor Avenue, Bonita, California. (Compl. ¶ 1.) Plaintiff alleges that, on or about October 25, 2006, he executed two notes secured by that property promising to pay Defendant Security National Mortgage the total sum of $575,000. (Compl. ¶¶ 7, 8.) Plaintiff has defaulted on the loans and foreclosure proceedings have been initiated. (Compl. ¶ 47.) The Complaint generally alleges that Defendants did not explain the interest rate to Plaintiff and that they charged improper fees for a sub-prime loan even though Plaintiff qualified for a prime rate mortgage on more favorable terms. (Compl. ¶¶ 10, 11.)

Plaintiff asserts causes of action for violation of the Truth in Lending Act ("TILA"), 15, U.S.C. § 1611 et seq.; violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq., violation of the Home Ownership and Equity Protection Act ("HOEPA"), 15 U.S.C. § 1602 et seq.; violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692; breach of fiduciary duty; breach of covenant of good faith and fair dealing; injunctive relief; and declaratory relief. (Compl.)

Defendant Aurora Loan Services ("Aurora") who has serviced Plaintiff's loans since January 1, 2007. (Compl. ¶¶ 12, 24; Def.'s RJN Ex. 1.) Aurora moves to dismiss Plaintiff's claims against it under Rule 12(b)(6) of the Federal Rules of Civil Procedure.


I. Motion to Dismiss -- Legal Standard

Federal Rule of Civil Procedure 8 requires a plaintiff to "plead a short and plain statement of the elements of his or her claim, identifying the transaction or occurrence giving rise to the claim and the elements of the prima facie case." Bautista v. Los Angeles County, 216 F.3d 837, 840 (9th Cir. 2000). This statement must be sufficient to "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). Rule 12(b)(6) provides that a complaint may be dismissed for "failure to state a claim upon which relief may be granted." Fed. R. Civ. P. 12(b)(6). A complaint may be dismissed as a matter of law if it lacks a cognizable legal theory or states insufficient facts under a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984).

The Supreme Court holds that the factual allegations of a complaint must be "enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). A plaintiff must plead more than conclusory allegations to show "plausible liability" and avoid dismissal. Id. at 1966 n.5. The Court has recently reiterated this principle, stating that the pleading standard of Rule 8 "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation" and a complaint does not suffice "if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 127 S.Ct. at 1966). The Court applies this standard to Plaintiff's challenged allegations.

In general, the scope of review on a motion to dismiss for failure to state a claim is limited to "allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice." Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). The Court may consider additional documents under the "incorporation by reference" doctrine as long as "the plaintiff's claim depends on the contents of a document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document, even though the plaintiff does not explicitly allege the contents of that document in the complaint." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).

II. Plaintiff's Claim for Violation of TILA

Plaintiff's first cause of action alleges that Defendants violated TILA by (1) refusing to "validate or otherwise make full accounting and the required disclosures as to the true finance charges and fees," improperly retaining funds belonging to the Plaintiff, and failing to ...

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