The opinion of the court was delivered by: Dean D. Pregerson United States District Judge
ORDER (1) DENYING PLAINTIFFS' MOTION FOR LEAVE TO FILE A FIRST AMENDED COMPLAINT, (2) GRANTING DEFENDANT HOMEQ'S MOTION TO DISMISS, (3) GRANTING IN PART DEFENDANT AIG'S MOTION FOR SUMMARY JUDGMENT, AND (4) DISMISSING PLAINTIFFS' REMAINING STATE LAW CLAIMS AGAINST DEFENDANT AIG [Motions filed on August 7, 2009, September 22, 2009, and September 25, 2009]
On June 15, 2009, Ernesto Cervantes and Maria Guadalupe Velazquez ("Plaintiffs") filed a Complaint in California Superior Court against defendants AIG Federal Savings Bank ("AIG"), formerly known as Wilmington Finance, a Division of AIG, and Barclays Capital Real Estate, Inc., doing business as HomEq Servicing ("HomEq").*fn1 Plaintiffs' Complaint alleges violations of various federal and state laws stemming from Plaintiffs' mortgage transaction and the imminent foreclosure of Plaintiffs' home. On July 23, 2009, AIG timely removed the action to this Court.
On July 30, 2009, AIG filed its Answer, Cross-Claim against mortgage brokers Guido Gil & Associates, Inc., for contractual indemnification and equitable indemnity, and Counterclaim against Plaintiffs for intentional and negligent misrepresentation.
On August 7, 2009, HomEq filed its Motion to Dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6). On September 22, 2009, Plaintiffs filed their Motion for Leave to File a First Amended Complaint. On September 25, 2009, AIG filed its Motion for Summary Judgment.
A. Plaintiffs' Motion for Leave to File a First Amended Complaint
1. Plaintiffs' Proposed Amendments
Plaintiffs move for leave to file a first amended complaint ("FAC") on the grounds that they have discovered new facts, including: (1) the identity of the current holder of the mortgage note and (2) that at least one document purportedly submitted by Plaintiffs along with their loan application to AIG (attached as exhibits to AIG's Counterclaim) appears to be "a complete forgery." (Plaintiff's Mot. 3:17.) Plaintiffs propose to amend the Complaint to (1) add "Deutche," the current holder of the note, as an additional defendant; (2) "amend and assert additional claims based upon the recent discovery of the forged loan application," (Mot. 3: 20-21); and (3) dismiss all of the federal claims asserted in the Complaint except for violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1602.
2. Legal Standard Pursuant to Federal Rule of Civil
Procedure 15(a)(2), a party may amend its pleading with the court's leave. "The court should freely give leave when justice so requires." FED. R. CIV. P. 15(a)(2). In light of the federal policy favoring the determination of cases on their merits, this policy is to be applied with "extreme liberality." Eminence Captial, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003); Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001). Factors that may justify denying a Rule 15(a)(2) motion include undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of the allowance of the amendment, and futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962). "In the absence of any apparent or declared reason," however, "the leave sought should, as the rules require, be 'freely given.'" Id. Prejudice to the opposing party is the "touchstone" of this inquiry. Eminence Capital, LLC, 316 F.3d at 1052.
The Court denies Plaintiffs' leave to amend because the proposed amendments would be futile. Plaintiffs' propose to dismiss all of their federal law claims with the exception of a claim for damages under TILA. However, Plaintiffs' proposed claim under TILA would be time-barred.
Actions for damages under TILA are subject to a one year statute of limitations. 15 U.S.C. § 1640(e). The Ninth Circuit has held that the one-year window for filing a TILA damages claim generally "runs from the date of the consummation of the transaction." King v. State of Cal., 784 F.3d 910, 915 (9th Cir. 1986). TILA implementing Regulation Z provides that an action for rescission ...