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Ozuna v. Home Capital Funding

November 30, 2009


The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court


Presently before the Court is defendant Countrywide Home Loans's ("Countrywide") motion to dismiss Plaintiff's first amended complaint for failure to state a claim. (Doc. No. 21-3.) Plaintiff filed an opposition and Countrywide replied.

The Court finds the motion appropriate for disposition without oral argument pursuant to Civil Local Rule 7.1(d). For the reasons stated herein, the Court GRANTS Countrywide's motion to dismiss.


This matter concerns a loan secured by Plaintiff Jose Ozuna's ("Plaintiff") real property at 4342 Highland Avenue, #3, San Diego, California 92115 (the "Property"). On January 5, 2006, Plaintiff obtained the loan from defendant Home Capital Funding ("Home Capital"). Defendant San Diego Real Estate Services ("Real Estate Services") acted as the broker for the loan. Countrywide is the loan servicer.

During the issuance of the loan, Home Capital and Real Estate Services allegedly violated both federal and state laws. First, Home Capital and Real Estate Services allegedly misrepresented the interest rate and material terms of the loan. Second, Home Capital and Real Estate Services allegedly failed to disclose, among other things, Plaintiff's right to cancel. Third, Plaintiff claims the terms of the loan could not be reasonably understood by the average consumer. Regarding the loan servicing, Plaintiff alleges Countrywide failed to give required notices and disclosures, and failed to adequately respond to Plaintiff's requests for information.

Subsequently, Plaintiff defaulted on the loan payments, and Countrywide initiated foreclosure proceedings on the Property.


On December 19, 2008, Plaintiff filed the original complaint. (Doc. No. 1.) Countrywide filed a motion to dismiss the complaint for failure to state a claim (Doc. No. 9), which the Court granted in part and denied in part on August 13, 2009 (Doc. No. 17).

On August 31, 2009, Plaintiff filed a first amended complaint ("FAC"), alleging nine causes of action: (1) violation of the Real Estate Settlement Procedures Act; (2) violation of the Truth in Lending Act; (3) violation of California Civil Code § 1632; (4) violation of California Business and Professions Code § 17200; (5) negligent misrepresentation; (6) fraud; (7) rescission; (8) quasi contract; and (9) determination of validity of the lien. (Doc. No. 19.) Plaintiff's FAC adds four new causes of action, and omits two that were brought in the original complaint.*fn1

On September 18, 2009, Countrywide filed the instant motion to dismiss all nine causes of action for failure to state a claim. (Doc. No. 21-3.) Countrywide has filed a request for judicial notice of documents in support of the motion to dismiss (Doc. No. 21), and Plaintiff has filed a request for judicial notice of documents in support of the opposition. (Doc. No. 27.)


I. Legal Standard

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a) (2009). A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pled in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir.1996).

To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1939 (2009) (citing Twombly, 550 U.S. at 556). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. at 1949 (citing Twombly, 550 U.S. at 556). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (citing Twombly, 550 U.S. at 557).

Furthermore, "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] 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 555 (citation omitted). "Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (citation omitted). In spite of the deference the court is bound to pay to the plaintiff's allegations, it is not proper for the court to assume that "the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the... laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526, (1983). Also, the court need not accept "legal conclusions" as true. Iqbal, 129 S.Ct. at 1949. However, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 1941.

II. Request for Judicial Notice

In ruling on a motion to dismiss for failure to state a claim, "a court may generally consider only 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).

Additionally, "a court may consider a writing referenced in a complaint but not explicitly incorporated therein if the complaint relies on the document and its authenticity is unquestioned." Id. (quoting Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir.1998), superseded by statute on other grounds as stated in Abrego v. Dow Chem. Co., 443 F.3d 676 (9th Cir. 2006)). The purpose of this rule is to prevent plaintiffs from surviving a Rule 12(b)(6) motion by deliberately omitting documents upon which their claims are based. Id. In considering such a writing, the court does not convert the motion into one for summary judgment under Rule 56. Parrino, 146 F.3d at 706 n.4 (noting that where an attached document is integral to the plaintiff's claims and its authenticity is not disputed, the plaintiff "obviously is on notice of the contents of the document and the need for a chance to refute evidence is greatly diminished").

A. Countrywide's Request

On September 18, 2009, Countrywide filed a request for judicial notice of the following documents relating to the loan origination in this case: (1) "Notice of Right to Cancel," dated January 5, 2006; (2) "RESPA Servicing Disclosure," dated January 5, 2006; (3) "Notice of Assignment, Sale, or Transfer of Servicing Rights"; (4) "Borrower's Acknowledgment of Disclosures," dated January 5, 2006; (5) "Truth-in-Lending Disclosure Statement," dated December 19, 2005; and (6) "Federal Truth-in-Lending Disclosure Statement," dated January 5, 2006. Countrywide also requests judicial notice of documents filed in the United States District Court for the Southern District of California in the case of Delino v. Platinum Community Bank, et al., Case No. 09-CV-00288-H (AJB).

The Court may properly consider documents relating to the loan origination. Plaintiff's FAC relies on these notices and disclosures, or the lack thereof, and Plaintiff does not question their authenticity. The documents filed in the case of Delino v. Platinum Community Bank, et al. are public records also properly subject to judicial notice. Accordingly, the Court GRANTS Countrywide's request.

B. Plaintiff's Request

On October 30, 2009, Plaintiff filed a request for judicial notice of the several documents in support of his opposition.*fn2 The Court finds they have no bearing on the Court's findings in this order. Accordingly, the Court DENIES AS MOOT Plaintiff's request for judicial notice.

III. Analysis A. First Cause of Action: Violation of RESPA

Plaintiff alleges Countrywide violated the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601-2617 (2009), which protects consumers from unnecessarily high settlement charges and abusive mortgage practices in connection with federally related mortgage loans. See 12 U.S.C. § 2601 (2009). Plaintiff alleges Countrywide violated RESPA in two ways:

(1) by failing to adequately respond to his Qualified Written Requests ("QWRs") and (2) by failing to provide certain disclosures at the loan's ...

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