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Balderas v. Countrywide Bank

December 10, 2009


The opinion of the court was delivered by: Hon. Michael M. Anello United States District Judge


This matter is before the Court on Defendants Countrywide Bank, N.A. and Countrywide Home Loans, Inc.'s [Doc. No. 27] motion to dismiss Plaintiffs Victor and Belen Balderas' First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiffs filed an [Doc. No. 30] opposition to the motion. The Court took the matter under submission on the papers pursuant to Civil Local Rule 7.1.d.1. For the following reasons, the Court GRANTS the motion.


Because this matter is before the Court on a motion to dismiss, the Court must accept as true the allegations of the complaint in question. Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740 (1976).*fn1

This action arises out of events related to the refinancing of Plaintiffs' primary residence, located at 131 Cassou Road, San Marcos, California, 92069-9703 ("the subject property"). On or about September 5, 2006, Plaintiffs were contacted by Defendant Mor Cazakov, an employee of Defendant AAA Funding, Inc. d/b/a First USA Funding and legal agent of Defendant Countrywide Bank, N.A. Cazakov represented to Plaintiffs that he was employed by Countrywide and offered Plaintiffs refinanced mortgage loans that would fix the Plaintiffs' mortgage interest rate, reduce their payments, and provide then with cash for home improvements. Although aware of Plaintiffs' inability to read or write in English, a loan application was filled out by another Countrywide employee, Soraya Qassim, and presented to Plaintiffs for signature that same date without the benefit of an interpreter. The loan application contained false statements regarding Plaintiffs' income, despite Plaintiffs' truthful representations to the contrary.

On or about September 22, 2006, Qassim appeared unannounced at Plaintiffs' home with a copy of the loan application for Plaintiffs' signature. Plaintiffs signed the application. Three days later, Casakov appeared unannounced at Plaintiffs' home, accompanied by a notary public, Defendant Galena Korol, seeking Plaintiffs' signatures on the loan documents. Plaintiffs informed Casakov that they would not sign the documents until they had the opportunity to review them with their daughter, who is fluent in English and familiar with the mortgage loan process. After six hours of attempting to reach their daughter, and with Cazakov and Korol refusing to leave their home without Plaintiffs' signatures, Plaintiffs signed the loan documents after midnight. On or about September 27, 2006, Plaintiffs contacted Cazakov to inform them of their desire that the loan be rescinded. Plaintiffs contacted Countrywide and informed a service representative of the same.

Once their daughter was able to translate and interpret the terms of the loan, Plaintiffs discovered that they actually signed documentation for two loans -- a first mortgage with a variable interest rate and a second mortgage with a fixed interest rate. Plaintiffs also learned that their existing mortgage included a prepayment penalty in excess of $17,000 which Cazakov never disclosed. Defendants failed to provide Plaintiffs with a properly prepared Notice of Right to Cancel. Plaintiffs began receiving and paying mortgage payments in December 2006 and continue to do so to their financial detriment. Plaintiffs have made several rescission demands, which Defendants rejected.

On May 20, 2009, Plaintiffs filed a First Amended Complaint ("FAC") against Defendants, alleging seven causes of action: (1) violations of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601, et seq; (2) fraud; (3) breach of fiduciary duty; (4) professional negligence; (5) violations of the California Consumer Legal Remedies Act, Cal. Civ. Code §§ 1750, et seq; (6) unfair business practices, Cal. Bus. & Prof. Code §§ 17200, et seq; and (7) trespass. Defendants move to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. In the alternative, Defendants request that the Court order Plaintiffs to re-plead pursuant to Rule 12(e).


A complaint survives a motion to dismiss if it contains "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S.544. The court reviews the contents of the complaint, accepting all factual allegations as true, and drawing all reasonable inferences in favor of the nonmoving party. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). Notwithstanding this deference, the reviewing court need not accept "legal conclusions" as true. Ashcroft v. Iqbal,--U.S.--, 129 S.Ct. 1937, 1949 (2009). Moreover, it is improper for a court to assume "the [plaintiff] can prove facts that [he or she] has not alleged." Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983). Accordingly, a reviewing court may begin "by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Iqbal, 129 S.Ct. at 1950.

"When 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. 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." Id. at 1949. "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. "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).

In ruling on a 12(b)(6) motion, a court generally cannot consider material outside of the complaint (e.g., facts presented in briefs, affidavits, or discovery materials). See, e.g., Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). A court may, however, consider exhibits submitted with the complaint. Knievel, 393 F.3d at 1076. A "court may [also] consider evidence on which the complaint 'necessarily relies' if: (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion." Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (citations omitted). A court may treat such a document as "part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6)." United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). A "court may disregard allegations in the complaint if contradicted by facts established by exhibits attached to the complaint." Sumner Peck Ranch v. Bureau of Reclamation, 823 F.Supp. 715, 720 (E.D. Cal. 1993) (citing Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987)).


Plaintiffs allege that Defendants violated the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1693 (2009), as well as TILA's implementing regulation (known as "Regulation Z"), 12 C.F.R. § 226.23, by failing to provide adequate notice of Plaintiffs' right to cancel the loan transactions and by failing to make other material disclosures at the time of the loans' origination. Based on these violations, Plaintiffs request rescission of the loans. ...

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