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Lingad v. Indymac Federal Bank

January 29, 2010

ADAM LINGAD, PLAINTIFF,
v.
INDYMAC FEDERAL BANK; MORTGAGEIT, INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; OPTIMUM LENDING GROUP, INC.; FRANK HOI CHEUNG WONG; ANTHONY PADUA; DOES 1-20 INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER GRANTING DEFENDANTS MORTGAGEIT AND MERS' MOTIONS TO DISMISS*fn1

Defendants MortgageIT, Inc. ("MortgageIT") and Mortgage Electronic Registration Systems, Inc. ("MERS") have each filed motions under Federal Rule of Civil Procedure 12(b)(6) to dismiss the claims brought against them in Plaintiff's complaint. (Docket Nos. 7, 15.) MortgageIT also filed a motion under Federal Rule of Civil Procedure 12(f) to strike portions of Plaintiff's complaint. (Docket No. 11.) For the reasons stated below, MortgageIT and MERS' motions to dismiss are GRANTED and MortgageIT's motion to strike is DENIED as MOOT.

I. LEGAL STANDARDS

A motion under Federal Rule of Civil Procedure 12(b)(6) ("Rule 12(b)(6)") "challenges a complaint's compliance with . . . pleading requirements." Champlaie v. BAC Home Loans Servicing, LP, No. S-09-1316 LKK/DAD, 2009 WL 3429622, at *1 (E.D. Cal. Oct. 22, 2009). A pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief . . . ." Fed. R. Civ. P. 8(a)(2). The complaint must "give the defendant fair notice of what the [plaintiff's] claim is and the grounds upon which relief rests . . . ." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Further, "[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).

To avoid dismissal, the plaintiff must allege "only enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 547. "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." Iqbal, 129 S.Ct. at 1949. Plausibility, however, requires more than "a sheer possibility that a defendant has acted unlawfully." Id. "When 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. (quotations and citation omitted).

In evaluating a motion under Rule 12(b)(6), the material allegations of the complaint are accepted as true and all reasonable inferences are drawn in favor of the plaintiff. See al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). However, neither conclusory statements nor legal conclusions are entitled to a presumption of truth. See Iqbal, 129 S.Ct. at 1949-50.

Plaintiff's opposition includes his requests that judicial notice be taken of three documents: (1) a copy of the Deed of Trust securing his mortgage loan, (2) the Assignment of the Deed of Trust and (3) a law review article entitled "Foreclosure, Subprime Mortgage Lending and the Mortgage Electronic Registration System." MERS objects to judicial notice being taken of the law review article, arguing that it is not a fact for which judicial notice is proper.

While, "as a general rule, a district court may not consider materials not originally included in the pleadings in deciding a Rule 12 motion . . . it may take judicial notice of matters of public record and may consider them without converting a Rule 12 motion into one for summary judgment." U.S. v. 14.02 Acres of Land More or Less in Fresno County, 547 F.3d 943, 955 (9th Cir. 2008)(quotations and citations omitted). However, to take judicial notice of a fact, it must be either "generally known within the territorial jurisdiction of the trial court" or "capable of accurate and ready determination by resort to sources whose accuracy cannot be reasonably be questioned." Fed. R. Evid. 201(b). The Deed of Trust and Assignment of Deed of Trust are publicly recorded documents of which judicial notice is proper. However, Plaintiff's third exhibit - a law review article -will not be judicially noticed as it is not a "fact" for which judicial notice is proper. See Champlaie, 2009 WL 3429622, at *4 (denying request for judicial notice of same article).

II. FACTUAL AND PROCEDURAL BACKGROUND

On or about June 28, 2006, Plaintiff obtained a loan from MortgageIT to purchase his home, located at 11820 Slate Falls Way in Rancho Cordova, California. (Compl. ¶¶ 7, 31.) The loan was memorialized in a Promissory Note secured by a Deed of Trust on the property. (Id. ¶ 31.) The Deed of Trust identifies MortgageIT as the lender and MERS as the beneficiary and nominee for the lender and the lender's successors and assigns. (Id. ¶¶ 31, 32; Request for Judicial Notice, Ex. 1.)

Plaintiff's claims stem from his allegations that Defendants Padua and Wong, a loan officer and real estate broker of Defendant Optimum Lending, channeled him into his allegedly unaffordable mortgage loan. (Id. ¶¶ 13, 14, 23-28.) Specifically, Plaintiff alleges that Padua told him that he could get him the "best deal" and the "best interest rates" and that if the loan ever became unaffordable, he would be able to refinance. (Id. ¶¶ 24, 28.) Plaintiff also alleges Padua exaggerated Plaintiff's earnings in order to obtain Plaintiff's loan. (Id. ¶ 26.)

On August 21, 2009, Plaintiff filed a complaint in this federal district court, alleging nine claims under federal and state law against six Defendants.

III. DISCUSSION

A. Truth In Lending Act

1. Plaintiff's Rescission Claim

MortgageIT argues Plaintiff's Truth In Lending Act ("TILA") claim for rescission of his mortgage loan should be dismissed since TILA does not apply to "purchase-money" loans. (MortgageIT Motion to Dismiss ("MortgageIT MTD") 3:7-26.) Plaintiff "acknowledges that his claim for rescission is inapplicable as to Defendant MortgageIT." (Opp'n to MortgageIT MTD 7 n.3.) Since residential mortgage transactions are excluded from the right to rescission under TILA, Plaintiff's claim for rescission is dismissed with prejudice. See 15 U.S.C. § 1635(e)(1)(providing that the right of rescission does not apply to a "residential mortgage transaction" in which a mortgage or deed of trust is created or retained against the borrower's dwelling to finance the acquisition of the dwelling).

2. Plaintiff's Claim for Damages

MortgageIT also argues Plaintiff's TILA claim for damages should be dismissed because his claim is barred by the one-year statute of limitations. (MortgageIT MTD 5:16-6:5.) MortgageIT further argues Plaintiff has failed to plead facts that support the application of equitable tolling. (MortgageIT MTD 6:6-18.) Plaintiff responds, arguing he has plead sufficient facts to show that the statute of limitations period should be equitably tolled.

An action under TILA for actual or statutory damages must be brought "within one year from the date of the occurrence of the violation." 15 U.S.C. § 1640(e). The limitation period starts to run "at the consummation of the [loan] transaction." King v. California, 784 F.2d 910, 915 (9th Cir. 1986). However, the doctrine of equitable tolling may "suspend the limitations period" "in certain circumstances," such as when the borrower did not have reasonable opportunity to discover the alleged fraud or nondisclosures that form the basis of the plaintiff's TILA claim. Id. "Because the applicability of [equitable tolling] often depends upon matters outside the pleadings, it is not generally amendable to resolution on a Rule 12(b)(6) motion." Supermail Cargo, Inc. v. U.S., 68 F.3d 1204, 1206 (9th Cir. 1995)(quotations and citation omitted). Nonetheless, when a plaintiff fails to allege any facts demonstrating that the TILA violations alleged could not have been discovered by due diligence during the one-year statutory period, equitable tolling should not be applied and dismissal at the pleading stage is appropriate. See Meyer v. Ameriquest Mortg. Co., 342 F.3d 899, 902 (9th Cir. 2003)(dismissing TILA claim, despite request for equitable tolling, because plaintiff was in possession of all loan documents and did not allege any concealment or other conduct that would have prevented discovery of the alleged TILA violations during the one year limitations period).

Plaintiff alleges MortgageIT violated TILA by: "(a) failing to provide [the] required disclosures prior to the consummation of the transaction; (b) failing to make required disclosures clearly and conspicuously in writing; (c) failing to timely deliver to Plaintiff notices required by TILA;(d) placing terms prohibited by TILA into the transaction; and (e) failing to disclose all finance charge details and the annual percentage rate based upon properly calculated and disclosed finance charges and amounts financed." (Compl. ¶ 58.) Further, Plaintiff alleges that "the facts surrounding his loan transaction were purposefully hidden [from him] to prevent [him] from discovering the true nature of the transaction and the documents involved therein." (Id. ¶ 30.) Lastly, Plaintiff alleges these TILA violations were "discovered within the past year, such that any applicable statute of limitations . . . should be extended pursuant to the equitable tolling doctrine . . . ." (Id. ¶ 48.)

Plaintiff's allegations are insufficient to invoke the doctrine of equitable tolling. The TILA violations complained of occurred at or prior to the closing of Plaintiff's loan transaction in June 2006, over three years prior to the commencement of this action. Plaintiff fails to explain in his complaint why he was prevented from discovering MortgageIT's alleged TILA violations within the one year statutory period. See Blanco v. Am. Home Mortg. Servicing, Inc., No. CIV 2:09-578 WBS DAD, 2009 WL 4674904, at *3 (E.D. Cal. Dec. 4, 2009)(finding equitable tolling inapplicable since plaintiff failed to offer facts demonstrating how the facts surrounding plaintiff's mortgage were concealed, and did not explain "what prevented her from later reviewing the loan documents, which she admittedly was given at closing . . ."). Plaintiff's allegation that "MortgageIT concealed the facts surrounding his mortgage" is ...


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