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Patacsil v. Wilshire Credit Corp.

February 5, 2010


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


Plaintiffs Ernesto Patacsil and Marilyn Patacsil ("Plaintiffs") seek monetary and injunctive relief from Defendants for claims arising under the federal Truth in Lending Act ("TILA"), California Rosenthal Fair Debt Collection Practices Act ("RFDCPA"), the federal Real Estate Settlement Procedures Act ("RESPA"), California's Unfair competition Law ("UCL"), and California's Foreign Language Contract Act.

Plaintiffs also allege state law claims of negligence, breach of fiduciary duty, fraud, breach of contract, breach of implied covenant of good faith and fair dealing, and wrongful foreclosure.

Presently before the Court is a Motion by Defendant Wilshire Credit Corporation ("Defendant") to Dismiss the Second, Third, Fourth, Sixth, Seventh, Tenth, and Eleventh Claims of Plaintiffs' Second Amended Complaint 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, Defendant's Motion to Dismiss is granted.


This action arises out of activity surrounding a residential loan transaction for property located at 335 Prado Way, Stockton, County of San Joaquin, California ("Property"). In January 2005, Defendant John Sanders approached Plaintiffs representing himself as a loan officer for Defendant South Coast Loans and Mortgage, Inc. and solicited Plaintiffs to refinance their residence. Sanders told Plaintiffs that he could get them the "best deal" and the "best interest rates" on the market.

Sanders promised Plaintiffs an affordable loan with a fixed rate, however he actually sold Plaintiffs an adjustable rate loan with prepayment penalties. Sanders further promised Plaintiffs that if the loans ever became unaffordable, he would refinance them into an affordable loan.

To qualify for these loans, Sanders overstated Plaintiffs' income without Plaintiffs' knowledge or consent. Plaintiffs are native of the Phillippines and their English skills, both verbal and written, are limited. Sanders failed to provide a translator at any stage of the proceeding. Plaintiffs further allege that Sanders hid facts from Plaintiffs surrounding the transaction which prevented Plaintiffs from discovering the nature of the transaction.

On or about March 30, 2005 Plaintiffs completed the loan on the Property. The terms of the loan were memorialized in a Promissory Note, which was secured by a Deed of Trust on the Property. The Deed of Trust identified Town and Country Title Services, Inc. as Trustee, and Defendant Argent Mortgage as Lender.

Plaintiffs allege that they were not given a copy of the documents prior to closing and that at the closing, they were only given a few minutes to sign the documents. Plaintiffs further allege they were not allowed to review the documents and were told only to sign and initial the documents and that they were not provided with the required copies of a proper notice of cancellation of the transaction.

Plaintiffs allege that Defendant began demanding monthly payments from the Plaintiffs, but failed to give requisite notice to the Plaintiffs that it acquired servicing rights.

On or about June 3, 2009, a Qualified Written Request ("QWR") under RESPA was mailed to Defendant identifying Plaintiffs, their loan, and listing their reasons for their belief that the account was in error due to fraud, improper charges, improper increases, and requesting specific information. In addition, the QWR included a demand to rescind the loan. Plaintiffs state that Defendant never properly responded to the QWR.


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. California's ...

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