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Tasaranta v. American Mortgage Network

September 21, 2009


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


On August 7, 2009, Defendant American Mortgage Network, Inc., also known as Vertice ("AMNet") removed this case from the Superior Court of California, County of San Diego. (Doc. No. 1.) On August 14, 2009, Defendant AMNet filed a motion to dismiss the complaint and a motion to strike portions of the complaint. (Doc. Nos. 4 & 5.) Plaintiffs Eric Tasaranta and Darilou Tasaranta, proceeding pro se, did not file a response in opposition.

The Court, pursuant to its discretion under Local Rule 7.1(d)(1), determines these matters are appropriate for resolution without oral argument and submits them on the papers. For the reasons set forth below, the Court grants Defendant AMNet's motion to dismiss the complaint and grants in part Defendant AMNet's motion to strike portions of the complaint.


Plaintiffs' complaint arises from a home loan secured by real property owned by Plaintiffs, located at 1918 Harrils Mill Ave, Chula Vista, CA 91913. (Doc. No. 1, Ex. A, Compl. ¶ 5.) Plaintiffs' complaint alleges causes of action for: (1) violation of the Truth In Lending Act ("TILA"), 15 U.S.C. §1601 et seq.; (2) violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §2605 et seq.; (3) violation of the Home Ownership and Equity Protection Act ("HOEPA"), 15 U.S.C. §1602, et seq.; (4) violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §1692, et seq.; (5) breach of fiduciary duty; (6) breach of the covenant of good faith and fair dealing; (7) injunctive relief; and (8) declaratory relief.

On or about May 6, 2005, Plaintiffs executed an adjustable rate note, promising to pay American Mortgage Network, Inc. ("AMNet") the sum of $619,000 in monthly payments. (Compl. 5.) Plaintiffs allege that the adjustable rate note was based upon a one year LIBOR. (Id. ¶ 6.) The deed of trust was recorded with the San Diego County Recorder's Office. (Id. ¶ 10.) Plaintiffs allege that crucial terms regarding the loan documentation were never fully explained, such as the exact interest rate set forth in the note, how and when any adjustments to that interest rate and the recurring monthly payment would occur, what index or basis would be used for calculating any interest rate adjustments, and the effect of any amortization. (Id. ¶ 7.) On information and belief, Plaintiffs allege that Defendants charged and obtained improper fees for the placement of their loan as "sub-prime" when they qualified for a prime rate mortgage, which would have generated less in fees and interest. (Id. ¶ 8.) Plaintiffs also allege on information and belief that the service of the note was transferred from or by Defendant to another Defendant, without the knowledge of Plaintiffs, rendering others "servicers" within the definition in RESPA. (Id. ¶ 9.)

Defendant AMNet moves to dismiss Plaintiffs' complaint for failure to state a claim pursuant to Fed. R. Civ. Pro. 12(b)(6). (Doc. No. 4.) AMNet also moves to strike portions of the complaint, specifically Plaintiffs' request for punitive damages in their first and fifth causes of action and Plaintiffs' request for rescission in their second cause of action. (Doc. No. 5.)


I. Motion to Dismiss Pursuant to Fed. R. Civ. Pro. 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 556). "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 555-56.

A. Truth In Lending Act

Plaintiffs' first cause of action is for violations of the Truth In Lending Act ("TILA") by AMNet and Defendant Homecomings Financial. (Compl. ¶¶ 11-17.) Plaintiff alleges that Defendants have violated TILA in that "they have refused and continued to refuse to validate or otherwise make full accounting and the required disclosures as to the true finance charges and fees," "they have improperly retained funds belonging to Plaintiffs in amounts to be determined," and "they have failed to disclose the status of the ownership of the loans." (Id. ¶ 13.) As a result of these alleged violations, Plaintiffs seek rescission of the loan, return of all funds received by Defendants from Plaintiffs, compensatory damages, and punitive damages. (Id. ¶¶ 14-17.)

TILA seeks to protect credit consumers by mandating "meaningful disclosure of credit terms." 15 U.S.C. §1601(a). Its provisions impose certain duties on creditors. The statute itself defines "creditor" as referring only to "the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness."

15 U.S.C. §1602(f). TILA has been amended to extend liability to assignees of the original creditor in certain situations. 15 U.S.C. § 1641(a). However, this provision applies "only if the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement, except where the assignment was involuntary." Id.

The Court concludes that Plaintiffs fail to sufficiently allege a cause of action against Defendants for TILA violations. Plaintiffs fail to allege which provisions of TILA AMNet allegedly violated and when any such violations took place. Plaintiffs make only conclusory allegations that Defendants have improperly retained funds belonging to Plaintiffs and have failed to disclose "true finance charges and fees." Plaintiffs' bare bone allegations that Defendants have failed to make a full accounting and disclose the true finance charges and fees do not put AMNet on fair notice of how required disclosures under TILA were incorrect.

Furthermore, Plaintiffs' request for any damages under TILA is subject to a one year statute of limitations, typically running from the date of the loan execution. 15 U.S.C. §1640(e). Plaintiffs' loan was executed on May 6, 2005, and this action was filed on July 2, 2009. (Compl. ¶ 5.) Plaintiffs do not allege that AMNet failed to make required disclosures or otherwise violated TILA in the appropriate time frame. The Ninth Circuit has held equitable tolling of civil damages claims brought under TILA may be appropriate "in certain circumstances," such as when a borrower might not have had a reasonable opportunity to discover the nondisclosures at the time of loan consummation. King v. State of California, 784 F.2d 910, 915 (9th Cir. 1986). Courts then have discretion to "adjust the limitations period accordingly." Id. The applicability of equitable tolling often depends on matters outside the pleadings. Supermail Cargo, Inc. v. U.S., 68 F.3d 1204, 1206 (9th Cir. 1995) (citation omitted.) Therefore, the determination "is not generally amenable to resolution on a Rule ...

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