The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge
Presently before the Court is a Motion by Defendants JP Morgan Chase Bank, N.A. ("JP Morgan") and Chase Home Finance LLC ("Chase Finance") (collectively "Defendants") to dismiss the Complaint of Plaintiffs Pavel Bezkerhov and Yelena Bezkerhova ("Plaintiffs") for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, Defendants' Motion is granted.
Through the present lawsuit Plaintiffs allege a litany of federal and state law violations in connection with the refinancing of their home mortgage and the subsequent non-judicial foreclosure of the mortgaged property.
In June 2007, Plaintiffs refinanced their home securing a $290,000 mortgage loan from JP Morgan, brokered by Consolidated Capital Mortgage (CC Mortgage). In pursuing the loan, Plaintiffs allege that the loan officer for JP Morgan and/or CC Mortgage misled them into believing this was the only creditor that would approve of Plaintiffs' loan. At the closing, JP Morgan and CC Mortgage allegedly failed to explain the terms of the documents presented for signature. At no point was a Real Income Analysis conducted, nor was there verification of Plaintiffs' ability to pay.
Plaintiffs eventually defaulted, and a Notice of Default and Election to Sell was recorded on December 19, 2008. The Notice identified Defendant Chase Finance as the assignee-beneficiary of the trust. On March 12, 2009, Plaintiffs, pursuant to the Real Estate Settlement Procedures Act, sent a Qualified Written Request ("QWR") to Chase Finance requesting a) information as to whether the Plaintiffs were properly furnished with the mandated disclosure documents; b) copies of the signed and dated disclosures and other loan documents, accompanied by a verification of actual delivery; c) copies of the promissory note and Deed of Trust; and d) information on the loan payment applications and other charges to the account. Chase Finance failed to respond to Plaintiffs' request.
Trustee's sale of the property was originally scheduled for April 9, 2009, but then postponed to July 10, 2009. On July 9, 2009, the day prior to the sale, Plaintiffs filed the underlying complaint, including a request for a Temporary Restraining Order to stop the sale, which was denied. The Plaintiffs' nine remaining causes of action still stand including allegations of violation of the federal Truth In Lending Act ("TILA"), violation of the federal Real Estate Settlement Procedures Act ("RESPA"), breach of the Covenant of Good Faith and Fair Dealing, breach of Fiduciary Duty, and Fraud. Defendants also request declaratory relief, declaration of nullity of documents, quiet title, and injunctive relief.
On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief" in order to "give the defendant fair notice of what the...claim is and the grounds upon which it rests."
Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964 (2007) (quoting 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. Id. at 1964-65 (internal citations and quotations omitted). Factual allegations must be enough to raise a right to relief above the speculative level. Id. at 1965 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004) ("The pleading must contain something more...than...a statement of facts that merely creates a suspicion [of] a legally cognizable right of action")).
"Rule 8(a)(2)...requires a 'showing,' rather than a blanket assertion of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirements of providing not only 'fair notice' of the nature of the claim, but also 'grounds' on which the claim rests." Twombly, 550 U.S. 556 n.3. A pleading must contain "only enough facts to state a claim to relief that is plausible on its face." Id. at 570. If the "plaintiffs...have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed." Id. Nevertheless, "[a] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and 'that a recovery is very remote and unlikely.'" Id. at 556.
When a claim for fraud is raised, Federal Rule of Civil Procedure 9(b) provides that "a party must state with particularity the circumstances constituting fraud." "A pleading is sufficient under Rule 9(b) if it identifies the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations." Neubronner v. Milken, 6 F.3d 666, 671-672 (9th Cir. 1993) (internal quotations and citations omitted). "The complaint must specify such facts as the times, dates, places, benefits received, and other details of the alleged fraudulent activity." Id. at 672.
A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. A court should "freely give" leave to amend when there is no "undue delay, bad faith[,] dilatory motive on the part of the movant,...undue prejudice to the opposing party by virtue of...the amendment, [or] futility of the amendment...." Fed. R. Civ. P. 15(a); Foman v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to amend is denied only when it is clear the deficiencies of the complaint cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).
A. TILA Claim as Asserted Against JP Morgan*fn2
The purpose of TILA is "to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit..." 15 U.S.C. § 1601(a). Plaintiffs allege that under TILA provisions JP Morgan was required to deliver two validly executed copies of the notice of the right rescind, but instead delivered only one properly executed Right to Cancel Notice for each borrower. JP Morgan argues that Plaintiffs' claim for TILA violations is time-barred because civil penalties under TILA are subject to a one-year statute of limitations.
Specifically the TILA statute of limitations, codified at 15 U.S.C. § 1640(e), states that, "Any action under this section may be brought in any United States district court, or in any other court of competent jurisdiction, within one year from the date of occurrence of the violation." The "date of occurrence" is the date the transaction is consummated, which in a mortgage loan case is when the plaintiff closed on the loan. See Walker v. Washington Mutual Bank FA, 63 F. App'x. 316, 317 (9th Cir. 2003). Plaintiffs' loan closed on July 13, 2007, triggering a TILA statute of limitations period that expired July 13, 2008.
Plaintiffs, however, did not file suit until July 9, 2009, nearly a year after the prescribed period. In most cases, an expiration of the statute of limitations would mandate dismissal of the claim.
However, to save their claim Plaintiffs argue that equitable tolling should apply to suspend the one-year statute of limitations. The Ninth Circuit has held that "the doctrine of equitable tolling may, in appropriate circumstances, suspend the limitations period until the borrower discovers or had reasonable opportunity to discover the fraud or nondisclosures that form the basis of the TILA action." King v. State of California, 784 F.2d 910, 915 (9th Cir. 1986). While the general rule may be that the limitations period starts at the consummation of the transaction, the "district courts may evaluate specific claims of equitable tolling to determine if the general rule would be unjust or frustrate the purpose of the Act and adjust the limitations period accordingly." Id.
In determining justifiable application of the equitable tolling doctrine, a court "focuses on excusable delay by the plaintiff." Johnson v. Henderson, 314 F.3d 409, 414 (9th Cir. 2002). Excusable delay by the plaintiff is defined as whether a reasonable plaintiff would not have known of the existence for a possible claim within the limitations period. Lukovsky v. City & County of San Francisco, 535 F.3d 1044, 1051 (9th Cir. 2008).
To establish excusable delay, the plaintiff must show "fraudulent conduct by the defendant resulting in concealment of the operative facts, failure of the plaintiff to discover the operative facts that are the basis of its cause of action within the limitations period, and due diligence by the plaintiff until discovery of ...