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Azzini v. Countrywide Home Loans

December 29, 2009


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


Presently before the Court is Defendant Countrywide Home Loans, Inc.'s ("Countrywide") motion to dismiss Plaintiffs' First Amended Complaint ("FAC"). (Doc. 27.) For the following reasons, the motion is granted.


On or about December 15, 2005, Plaintiffs Davide Azzini and Mario Rosa ("Plaintiffs") executed a loan on real property located in Imperial Beach, California. (FAC ¶¶ 7, 32.) Plaintiffs allege that multiple defendants engaged in unlawful lending practices. (Id. at ¶¶ 31, 36.) As to Defendant Countrywide, Plaintiffs allege eight claims for relief: (1) violation of California's Rosenthal Act, Cal. Civ. Code § 1788, et seq.; (2) negligence; (3) violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605, et seq.; (4) breach of fiduciary duty; (5) fraud; (6) violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, et seq.; (7) breach of contract and; (8) breach of the implied covenant of good faith and fair dealing.

Plaintiffs filed their complaint on April 16, 2009. (Doc. 1.) Countrywide filed a motion to dismiss, which this Court denied as moot after Plaintiffs filed their FAC. (Docs. 19-21.) Countrywide filed the instant motion on September 25, 2009, (Doc. 27), and Plaintiffs filed an opposition. (Doc. 30.) Countrywide did not reply.


In two recent opinions, the Supreme Court established a more stringent standard of review for 12(b)(6) motions. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss under this new standard, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 570). "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. (citing Twombly, 550 U.S. at 556). "Determining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)). In Iqbal, the Court began this task "by identifying the allegations in the complaint that are not entitled to the assumption of truth." Id. at 1951. It then considered "the factual allegations in respondent's complaint to determine if they plausibly suggest an entitlement to relief." Id. at 1951.


The FAC does not plainly state how Countrywide is involved in the alleged unlawful lending practices. Plaintiffs allege that Defendants Morgan, and Gambino, aka Duhommel, fraudulently induced Plaintiffs to enter into a home loan. (FAC ¶¶ 24-32.) Morgan and Gambino, along with Defendants Johnson, Crowder, and Kwasny allegedly were employed by Defendant Morningstar Capital Corp. (Id. at ¶¶ 13-14.) Plaintiffs' loan was secured by a deed of trust which identifies Defendant Home Capital Funding, dba Harbor Capital Group, as the lender, and Defendant Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee for the lender. (Id. at ¶ 32.) The only mention of Countrywide, however, is that Plaintiffs mailed Countrywide a Qualified Written Request ("QWR") under RESPA to rescind the loan in accordance with the Truth in Lending Act ("TILA"), and that Countrywide failed to respond. (Id. at ¶ 34.) Countrywide's motion to dismiss reveals that Countrywide is the servicer of Plaintiffs' loan. (Mot. at 1.)

Countrywide seeks dismissal of the eight claims for relief asserted against it in the FAC for failure to state a claim. Plaintiffs agreed to dismiss without prejudice the claims for breach of fiduciary duty, breach of contract, and breach of the implied covenant of good faith and fair dealing. The remaining claims are addressed in turn.

A. Rosenthal Act

Plaintiffs allege Countrywide is a debt collector under the Rosenthal Act and that it acted unlawfully by "collecting on a debt not owed to Defendants, making false reports to credit reporting agencies, foreclosing upon a void security interest, foreclosing upon a Note of which they were not in possession nor otherwise entitled to payment, falsely stating the amount of a debt, increasing the amount of a debt by including amounts that are not permitted by law or contract, and using unfair and unconscionable means in an attempt to collect a debt." (FAC ¶ 68-69.)

To the extent Plaintiffs' attempt to state a claim for foreclosure upon a note which Countrywide was not in possession, the claim fails. Countrywide correctly argues it may foreclose on the property without possession of the note. "[California] Civil Code sections 2924 through 2924k provide a comprehensive framework for the regulation of a non-judicial foreclosure sale pursuant to a power of sale contained in a deed of trust." Moeller v. Lien, 25 Cal. App. 4th 822, 830 (1994). In such a sale, no party needs to physically possess the promissory note. See Cal. Civ. Code § 2924(a)(1) (trustee's sale may be conducted by the "trustee, mortgagee, or beneficiary or any of their authorized agents"). Because "[t]he comprehensive statutory framework established to govern non-judicial foreclosure sales is intended to be exhaustive," the Court cannot "incorporate [the UCC's possession rule] into statutory non-judicial foreclosure proceedings." Moeller, 25 Cal. App. 4th at 834.

The remaining allegations are conclusory and not supported by any factual allegations. For example, Plaintiffs state Defendants used "unfair and unconscionable means" to collect a debt, yet there are no allegations of threats, harassing phone calls, or other such activity specifically prohibited under the Rosenthal Act. See, e.g., Cal. Civ. Code ยงยง 1788.10, ...

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