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Lal v. American Home Servicing

January 15, 2010

PARVEEN A. LAL AND JODI L. WRIGHT, PLAINTIFFS,
v.
AMERICAN HOME SERVICING, INC. AND LENDER DOE, DEFENDANTS.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

Presently before the Court is a Motion by Defendant American Home Mortgage Servicing, Inc. ("Defendant") to Dismiss portions of the First Amended Complaint of Plaintiffs Parveen A. Lal and Jodi L. Wright ("Plaintiffs") for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn1 For the reasons set forth below, Defendant's Motion to Dismiss is granted.

BACKGROUND*fn2

Around June 28, 2006, Plaintiffs entered into a mortgage loan for $821,750 with Paramount Equity Mortgage ("Paramount"). The loan was initially serviced by Paramount, but was later serviced by Defendant American Home Mortgage Servicing, Inc. The mortgage note has since allegedly been sold to an unknown holder. On March 10, 2009, Plaintiffs sent a letter to Defendant stating that they were not provided notice of the right to cancel under TILA, and that pursuant to TILA they were rescinding their loan. Plaintiffs additionally requested that the Defendant indicate its relationship to the loan and identify the true owner of the mortgage note. Plaintiffs also directed Defendant to stop trying to collect on the loan and to cease all future collection communications. According to Plaintiffs, Defendant has failed to respond to the letter or comply with its terms.

Plaintiffs now allege a litany of state and federal law violations in connection with the foreclosure. This is the second motion to dismiss between these parties. The first was denied in part and granted in part with leave to amend. Plaintiffs thereafter filed a First Amended Complaint.

STANDARD

A. Motion to Dismiss

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).

ANALYSIS

A. Rescission under TILA

Under TILA, a plaintiff must allege ability to tender the amount owed on the loan as a prerequisite to rescission. This Court granted Defendant's prior motion to dismiss Plaintiffs' rescission claim on the grounds that Plaintiffs failed to allege tender. Having filed an amended complaint, Plaintiffs now assert that they are "prepared to tender from a refinance, funds from savings, and assistance by family members once the ...


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