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Sanchez v. Indymac Bank

August 14, 2009

DONALD SANCHEZ, PLAINTIFF,
v.
INDYMAC BANK, FSB, ET AL., DEFENDANTS.



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

MEMORANDUM AND ORDER

Presently before the Court is a Motion to Dismiss filed by Defendants Windsor Capitol Mortgage Inc., Linda Temko, and Barbara Cuillo (collectively "Defendants"). For the following reasons, Defendants' Motion to Dismiss is granted in part and denied in part.*fn1

BACKGROUND

On January 8, 2007, Plaintiff obtained through Defendant Windsor Capital a mortgage secured by his home. Plaintiff subsequently defaulted on his loan resulting in the filing of a Notice of Default and Notice of Trustee Sale.

Plaintiff alleges he was unable to afford the loan, despite reassurances from the moving Defendants to the contrary, because his net pay was less than $3500 per month and he had car payments totaling over $1100 monthly. Nevertheless, Defendants told Plaintiff he qualified for a loan of approximately $400,000. In response to Plaintiff's understandable surprise, Defendant Early, another Windsor Capital loan officer, allegedly told Plaintiff that "he only had to pay the loan for one year and then Defendant Early promised he would obtain refinancing to provide a more affordable loan." FAC, ¶ 20.

According to Plaintiff, Defendant Early then placed Plaintiff in a subprime loan, the terms of which he misrepresented. Plaintiff contends he relied on Defendant Early's promise to assist Plaintiff in later refinancing the mortgage when he agreed to the loan's terms. He further alleges, inter alia, "Defendant Windsor Capital regularly solicited unqualified borrowers and approved loans to unqualified borrowers, including the Plaintiff, in violation of applicable underwriting standards and in violation of standards of the industry for the sole purpose of earning fees to make such loans." Id., ¶ 24.

Accordingly, Plaintiff filed the instant action seeking relief for Defendants' alleged violation of the Truth in Lending Act, 15 U.S.C. § 1601 et seq., Negligence, violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605, et seq., Breach of Fiduciary Duty, Fraud, violations of California Business and Professions Code § 17200, Breach of Contract, and Breach of the Implied Covenant of Good Faith and Fair Dealing.

Defendant challenged Plaintiff's first, third, fifth, seventh, and eighth causes of action via this instant Motion to Dismiss. By way of his opposition, Plaintiff concedes the merits of Defendants' objections as to the first and third causes of action. Accordingly, Defendants' only remaining challenges are as to the fifth (Fraud), seventh (Breach of Contract), and eighth claims (Breach of the Implied Covenant of Good Faith and Fair Dealing).

STANDARD

On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief" in order to "give the defendant fair notice of what the...claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the "grounds" of his "entitlement to relief" requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Id. at 1964-65 (internal citations and quotations omitted). Factual allegations must be enough to raise a right to relief above the speculative level. Id. at 1965 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004) ("The pleading must contain something more...than...a statement of facts that merely creates a suspicion [of] a legally cognizable right of action")).

A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. A court should "freely give" leave to amend when there is no "undue delay, bad faith[,] dilatory motive on the part of the movant,...undue prejudice to the opposing party by virtue of...the amendment, [or] futility of the amendment...." Fed. R. Civ. P. 15(a); Foman v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to amend is denied only when it is clear the deficiencies of the complaint cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).

ANALYSIS

1. Plaintiff's Fifth Cause of ...


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