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Lincoln v. GMAC Mortgage

December 18, 2009

MICHAEL LINCOLN, SHARON OWENS, PLAINTIFF,
v.
GMAC MORTGAGE, LLC A DELAWARE LIMITED LIABILITY COMPANY; EXECUTIVE TRUSTEE SERVICES, A LIMITED LIABILITY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Dean D. Pregerson United States District Judge

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

[Motion filed on September 16, 2009]

This matter comes before the Court on Defendants GMAC Mortgage, LLC ("GMAC") and Executive Trustees Services, LLC ("ETS")'s motion to dismiss Plaintiffs' First Amended Complaint ("FAC") for failure to state a claim. After reviewing the parties' moving papers, the Court grants the motion with respect to Plaintiffs' federal law claims, but grants them leave to amend their complaint. If Plaintiffs fail to amend the FAC such that it states a federal claim on which relief can be granted, the Court will likely decline to exercise supplemental jurisdiction over the pendent state law claims. See 28 U.S.C. § 1367(c).

I. Background

Plaintiffs are the owners of real property located at 3667 Olympiad Drive, Los Angeles, California, 90043. (FAC ¶ 6.) On or about May 27, 2008, Plaintiffs entered into and signed a loan modification agreement ("agreement") with GMAC. (FAC ¶ 35, Ex. A.) Following approval and execution of the agreement, Plaintiffs received letters from GMAC notifying them that their required monthly payments would increase. (FAC ¶ 22, Ex. B.) Plaintiffs contend that the agreement did not authorize GMAC to increase their monthly payments. (FAC ¶ 23-24.)

GMAC sent several letters (dated August 4, 2008, August 11, 2008, September 2, 2008, September 11, 2008, October 2, 2008) to Plaintiffs informing them their loan was in default, and a notice of default was recorded on November 19, 2009. (FAC, Exhibits B & D.) ETS, the trustee designated on the Deed of Trust, then commenced non-judicial foreclosure proceedings. (FAC ¶ 23.)

In the FAC, Plaintiffs state the following causes of action:

(1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) violations of California Business & Professions Code § 17200 et seq.; (4) negligent misrepresentation and general negligence; (5) violations of the Real Estate Settlement Procedures Act ("RESPA"); and (6) violations of California Civil Code § 2924.

II. Legal Standard

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint is subject to dismissal when the Plaintiff's allegations fail to state a claim upon which relief can be granted. When considering a 12(b)(6) motion to dismiss for failure to state a claim, "all allegations of material fact are accepted as true and should be construed in the light most favorable to [the] plaintiff." Resnick v. Hayes, 213 F.3d 433, 447 (9th Cir. 2000).

In Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009), the Supreme Court explained that a court considering a 12(b)(6) motion should first "identify[] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth."

Id. Next, the court should identify the complaint's "well-pleaded factual allegations, . . . assume their veracity and then determine whether they plausibly give rise to an entitlement to relief."

Id.; see also Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) ("In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim ...


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