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Llaban v. Carrington Mortgage Services

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA


September 3, 2009

ALLAN LLABAN, AN INDIVIDUAL, PLAINTIFF,
v.
CARRINGTON MORTGAGE SERVICES, LLC., NEW CENTURY MORTGAGE CORPORATION, OLD REPUBLIC DEFAULT SERVICES, DEFENDANTS.

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

ORDER GRANTING MOTION TO DISMISS THE COMPLAINT

On July 7, 2009, Plaintiff Allan Llaban, appearing pro se, filed a complaint in state court alleging deceptive and unfair trade practices, violations of the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), and the Home Ownership and Equity Protection Act (HOEPA), and seeking injunctive and declaratory relief. (Doc. 1, Ex. 1.) On July 31, 2009, Defendants Carrington Mortgage Services, LLC., New Century Mortgage Corporation, Old Republic Default Services removed this action to federal court pursuant to 28 U.S.C. § 1441. (Doc. 1.) On August 6, 2009, Defendants filed a motion to dismiss Plaintiff's complaint for failure to state a claim. (Doc. 4.) Plaintiff did not file a response in opposition.

Pursuant to the Court's discretion under local Rule 7.1(d)(1), the Court determines this matter is appropriate for resolution without oral argument, and submits it on the pleadings. For the reasons set forth below, the Court GRANTS Defendants' motion to dismiss.

Background

Plaintiff Allan Llaban's complaint arises from threatened foreclosure proceedings against his home. On July 7, 2009, Plaintiff filed a complaint in the California Superior Court for the County of San Diego, asserting claims for deceptive and unfair trade practices, injunctive and declaratory relief, TILA, RESPA, and HOEPA violations, and failure to provide the truth in lending statement and good faith estimate within three business days as required by RESPA. (Doc. 1, Ex. 1.)

Plaintiff is the owner of real property located at 13345 Trailhead Place, San Diego, CA 92129 ("Property"). (Doc. 1, Ex. 1 ¶ 6.) On May 18, 2006, Plaintiff executed a Deed of Trust, securing a Promissory Note in the amount of $890,500,00 ("Loan"). (Doc. 4, Attach. 1, Ex. 1.) The Deed of Trust identifies the Lender as New Century Mortgage Corporation ("New Century"), and the Trustee as Old Republic Title Co ("Old Republic"). (Id.) New Century assigned the Deed of Trust to Deutsche Bank, and the assignment was recorded on September 18, 2007. (Doc. 4, Attach. 1, Ex. 2.)

On May 2, 2008, Old Republic recorded a Notice of Default on the Loan in the amount of $46,765.21. (Doc. 4, Attach. 1, Ex. 3.) On June 27, 2008, Deutsche Bank substituted in Old Republic Default Management Services ("Old Republic Default") as Trustee. (Doc. 4, Attach. 1, Ex. 4.) On January 28, 2009, Old Republic Default recorded a Notice of Trustee's Sale, setting the sale date for February 17, 2009. (Doc. 4, Attach. 1, Ex. 5.) The sale was postponed until July 8, 2009. (Doc. 1, Ex. 1 ¶ 7.)

On July 7, 2009, one day before the scheduled sale, Plaintiff filed a complaint in the California Superior Court for the County of San Diego. (Doc. 1, Ex. 1.) Plaintiff asserted claims for (1) deceptive and unfair trade practices, (2) injunctive and declaratory relief, (3) violations of TILA, RESPA, and HOEPA, and (4) failure to provide Plaintiff with the truth in lending statement and good faith estimate within three business days as required by RESPA. (Doc. 1, Ex. 1.) On July 31, 2009 Defendants removed the case to this Court pursuant to 28 U.S.C. § 1441(b). (Doc. 1.)

Defendants now move to dismiss Plaintiff's complaint for failure to state a claim. (Doc. 4.) In support of their motion, Defendants ask the Court to take judicial notice of five documents: (1) a copy of the Deed of Trust encumbering the Property, recorded on May 25, 2006; (2) a copy of an Assignment of the Deed of Trust, recorded on September 18, 2007; (3) a copy of the Notice of Default and Election to Sell Under Deed of Trust, recorded on May 2, 2008; (4) a copy of the Substitution of Trustee, recorded on January 28, 2009; and (5) a copy of a Notice of Trustee's Sale, recorded on January 28. 2009. (Doc. 4, Attach. 1.)

Discussion

I. Motion to Dismiss Pursuant to 12(b)(6)

A motion to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Black, 250 F.3d 729, 731 (9th Cir. 2001). A complaint generally must satisfy only the minimal notice pleading requirements of Federal Rule of Civil Procedure 8(a)(2) to evade dismissal under a Rule 12(b)(6) motion. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). Rule 8(a)(2) requires that a pleading stating a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The function of this pleading requirement is to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." 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." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). 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 id. at 557). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235--36 (3d ed. 2004)). "All allegations of material fact are taken as true and construed in the light most favorable to plaintiff. However, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim." Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir.1996); see also Twombly, 550 U.S. at 555.

"Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir.1990). The court may, however, consider the contents of documents specifically referred to and incorporated into the complaint. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994). Additionally, the Court may take judicial notice of matters of public record. See Lee v. City of Los Angeles, 250 F.3d 668, 689--90 (9th Cir.2001). Accordingly, the Court takes judicial notice of the documents provided by the Defendants, as Plaintiff refers to and relies on the documents in his complaint and they are matters of public record as all are recorded with the San Diego County Recorder's Office.

A. Deceptive and Unfair Trade Practices

Plaintiff's first cause of action is for deceptive and unfair trade practices. (Doc. 1, Ex.1.) In the first paragraph of his complaint, Plaintiff states that he has "filed a Complaint for Deceptive and Unfair Trade Practices." (Id. ¶ 1.) Although the complaint does not mention whether Plaintiff's first cause of action arises under the California Unfair Competition Law, California Business and Professions Code sections 17200 et seq., in order to bring a claim under that theory, Plaintiff must show either an (1) "unlawful, unfair, or fraudulent business act or practice," or (2) "unfair, deceptive, untrue, or misleading advertising." Stewart v. Life Ins. Co. of North America, 388 F. Supp.2d 1138, 1143 (quoting Lippitt v. Raymond James Fin. Servs., 340 F.3d 1033, 1043 (9th Cir.2003)). A plaintiff who alleges unfair business practices must "state with reasonable particularity the facts supporting the statutory elements of the violation." Khoury v. Maly's of California, Inc., 17 Cal. Rptr. 2d 708, 712 (Ct. App. 1993). Although the complaint references "Deceptive and Unfair acts and practices ... more fully set forth in Plaintiff's First Cause of Action set forth above," Plaintiff failed to identify the facts supporting his claim with sufficient particularity. (Doc. 1, Ex. 1, ¶ 7.)

Under Federal Rule of Civil Procedure 8(a)(2), a plaintiff is required to set forth a "short and plain statement" of the claim showing that the plaintiff is entitled to relief and giving the defendant fair notice of what the claim is and the ground upon which it rests. See Fed. R. Civ. P. 8(a)(2). Because Plaintiff failed to identify particular facts in support of the first cause of action, Plaintiff's first cause of action does not give Defendants sufficient notice of the charges against them. Defendants' motion to dismiss for failure to state a claim is therefore GRANTED as to the first cause of action.

B. Request for Injunctive and Declaratory Relief

Plaintiff's second claim is for injunctive and declaratory relief. (Doc. 1, Ex. 1.) Plaintiff requests to enjoin Defendant from foreclosing on the Property, and from committing further "deceptive and unfair trade practices which are likely to deceive the public." (Id. ¶ 17.) A request for injunctive relief is merely a remedy and is not a cause of action. Shamsian v. Atl. Richfield Co.,132 Cal.Rptr.2d 635, 648-49 (Ct. App. 2003). A cause of action must exist before injunctive relief may be granted. Plaintiff bases his request for injunctive relief on the alleged deceptive and unfair practices and violations of TILA, RESPA, and HOEPA. The Court has concluded that Plaintiff fails to state a claim based on the alleged deceptive and unfair practices of Defendants. For the reasons outlined below, the Court concludes that Plaintiff failed to state a claim based on the violations of TILA, RESPA, and HOEPA.

Plaintiff is also seeking declaratory relief. (Doc. 1, Ex. 1.) Although the complaint does not specify the relief being sought, Plaintiff may be seeking a judicial declaration that a foreclosure by Defendants would be improper. Under 28 U.S.C. § 2201, "any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." Declaratory relief should be denied if it will "neither serve a useful purpose in clarifying and settling the legal relations in issue nor terminate the proceedings and afford relief from the uncertainty and controversy faced by the parties." United States v. Washington, 759 F.2d 1353, 1356-57 (9th Cir. 1985). A claim for declaratory relief is unnecessary where an adequate remedy exists under some other cause of action. Manown v. Cal-Western Reconveyance Corp., 2009 WL 2406335, at *6 (S.D. Cal. Aug. 4, 2009). The Court finds that the declaratory relief Plaintiff seeks is entirely commensurate with the relief sought through his other causes of action. Thus, Plaintiff's declaratory relief claim is duplicative and unnecessary.

Accordingly, the Court GRANTS Defendants' Motion to Dismiss Plaintiff's second cause of action for injunctive and declaratory relief.

C. TILA Violations

Plaintiff's third and fourth causes of action allege TILA violations. (Doc. 1, Ex. 1.) Plaintiff first alleges that an audit discovered that "there were TILA ... violations." (Id. ¶ 2.)

Plaintiff also alleges that the "Final Truth-in-lending statement" was incorrect, because the finance charges were "understated by $1,965,870." (Doc. 1, Ex. 1, ¶ 4.) However, Plaintiff fails to set forth: (1) the specific sections of TILA that were violated; (2) which Defendants violated those rights; and (3) factual allegations sufficient to support those violations at the pleading stage.

Plaintiff also alleges a claim for failure to provide "truth in lending statement" within three business days. (Doc. 1, Ex. 1, ¶ 5.) Plaintiff does not cite a specific TILA provision to support his claim. Plaintiff may be alleging that his three-year right to rescind the loan transaction was triggered by Defendants' failure to provide clear and conspicuous notice of TILA's three-day post-transaction right to cancel. Plaintiffs' claim for rescission under TILA fails as a matter of law. Under 15 U.S.C. § 1635(e),"residential mortgage transactions" are excluded from the three-year right of rescission. A "residential mortgage transaction" is defined by 15 U.S.C. § 1602(w) to include "a mortgage, deed of trust, ... or equivalent consensual security interest...created...against the consumer's dwelling to finance the acquisition...of such dwelling." Thus, while home equity loans and refinancing transactions would be amenable to rescission, Plaintiffs' purchase money mortgage is not.

Furthermore, Plaintiff's claims under TILA, whether subject to one-year or three-year statute of limitations, appear to be time-barred. Generally, a claim for damages under TILA must be brought "within one year from the date of the occurrence of the violation." 15 U.S.C. § 1640(e). The right of rescission pursuant to TILA "shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first ...."

Id. § 1635(f). Plaintiff executed the Deed of Trust securing the Loan on May 18, 2006. (Doc. 4, Attach. 1, Ex. 1.) Plaintiff filed this case on July 7, 2009. (Doc. 1, Ex. 1.) The three-year statute of limitations for rescission under TILA expired on May 18, 2009. The one-year statute of limitations for damages expired in 2007. Because Plaintiff has not alleged any facts that would entitle Plaintiff to equitable tolling of his TILA claims, the Court dismisses Plaintiff's TILA cause of action with leave to amend.

D. RESPA Violations

Plaintiff's third cause of action alleges "RESPA violations." (Doc. 1, Ex. 1, ¶ 2.) This allegation is not supported by facts, and thus fails to state a claim. Plaintiff does not allege facts showing the conduct of any individual Defendant, and does not specify which statutory provisions have been violated. Plaintiff's allegation consists of " 'naked assertion[s]' devoid of 'further factual enhancement.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)). In addition, the complaint fails to allege Plaintiff's pecuniary loss to support a RESPA violation. See 12 U.S.C. § 2605(f)(1)(A) ("Whoever fails to comply with this section shall be liable to the borrower ... [for] any actual damages to the borrower as a result of the failure ..."); Hutchinson v. Del. Sav. Bank FSB, 410 F. Supp. 2d 374, 383 (D.N.J. 2006) ("However, alleging a breach of RESPA duties alone does not state a claim under RESPA. Plaintiffs must, at a minimum, also allege that the breach resulted in actual damages.").

Plaintiff's fourth cause of action alleges a claim for failure to provide "good faith estimate" within three business days "as required by RESPA." (Doc. 1, Ex. 1, ¶ 5.) The complaint does not cite a specific RESPA provision that was violated. Plaintiff may have intended to rely on 12 U.S.C. §§ 2603 and 2604. Under section 2604, the lender must provide the borrower with "a good faith estimate of the amount or range of charges for specific settlement services the borrower is likely to incur." 12 U.S.C. § 2604(c). In addition, under section 2603, the lender must complete and make available to the borrower either before or at settlement a uniform settlement statement reflecting the actual settlement costs. 12 U.S.C. § 2603(b). However, the only RESPA provision that provides for a private right of action is section 2614, which states: "Any action pursuant to the provisions of section 2607 or 2608 of this title may be brought in the United States district court or in any other court of competent jurisdiction ..." 12 U.S.C. § 2614. Thus, section 2614 provides for a private right of action for claims brought under sections 2607*fn1 and 2608.*fn2 The courts that have examined the issue have refused to imply a private right of action under any other section of the Act. See Bloom v. Martin, 865 F. Supp. 1377 (N.D. Cal.1994) (holding that 12 U.S.C. § 2603 does not imply a private right of action), aff'd, 77 F.3d 318, 319 (9th Cir. 1996); Collins v. FMHA-USDA, 105 F.3d 1366, 1368 (11th Cir. 1997) ("[T]here is no private civil action for a violation of 12 U.S.C. § 2604(c), or any regulations relating to it."); Currey v. Homecomings Fin., LLC, 2009 WL 1227010, at *6 (N.D. Cal. May 1, 2009) (holding that no private right of action exists under section 2603 or 2604); Brophy v. Chase Manhattan Mortg. Co., 947 F. Supp. 879, 882 (E.D. Pa. 1996) ("Since the statute specifically provides for a private right of action under specific sections--but not § 2604--a private right of action should not be implied under § 2604."). Therefore, assuming Plaintiff meant to allege a violation of sections 2603 or 2604, the Court dismisses this claim for failure to state a claim upon which relief may be granted.

E. HOEPA Violations

Plaintiff also alleges HOEPA violations. (Doc. 1, Ex. 1, ¶¶ 2, 3.) Plaintiff's claims under HOEPA fail as a matter of law, because "residential mortgage transactions," such as Plaintiff's purchase money mortgage, are expressly excluded from coverage. 15 U.S.C. § 1639(a)(1). A "residential mortgage transaction" is defined in turn by 15 U.S.C. § 1602(w) to include "a mortgage, deed of trust, ... or equivalent consensual security interest ... created ... against the consumer's dwelling to finance the acquisition ... of such dwelling."

Accordingly, the Court dismisses Plaintiff's claims for HOEPA violations with prejudice.

Conclusion

For the reasons set forth above, the Court GRANTS Defendants' motion to dismiss the complaint. Plaintiff may file an amended complaint curing the noted deficiencies within 30 days of the date of this order.

IT IS SO ORDERED.


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