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Craver v. National City Bank

February 16, 2010


The opinion of the court was delivered by: Craig M. Kellison United States Magistrate Judge


Plaintiff, proceeding pro se, brings this action to quiet title. Pursuant to the written consent of all parties, this case is before the undersigned as the presiding judge for all purposes, including entry of final judgment. See 28 U.S.C. § 636(c).

Pending before the court is Defendants' motion to dismiss (Doc. 34), Defendants' motion to strike (Doc. 35), Plaintiff's motion for injunction (Doc. 45), and Plaintiff's motion for summary judgment (Doc. 57). A hearing on the motions was held on January 28, 2010, before the undersigned in Redding, California. Defense counsel Natilee Riedman and Plaintiff, proceeding pro se, appeared in person.

I. Background

This is a pro se civil case involving Plaintiff's mortgage. This matter was originally filed in the Shasta County Court, but was removed to this court by Defendants. Following removal, Defendants filed the first motion to dismiss and motion to strike, and Plaintiff filed a motion to remand. The motion to remand was denied (based on diversity jurisdiction). The motion to dismiss was granted, for failure to state a claim, and Plaintiff was granted leave to file an amended complaint to cure the defects identified.*fn1

Addressing Plaintiff's original complaint, the court interpreted her complaint as attempting to state a claim for fraud and violations of the Truth in Lending Act (TILA). She raises issues with her home mortgage, which she refinanced in February 2007. Plaintiff claims that her husband's income was falsely inflated in the refinance loan documents and Defendants (who are the lender) relied on the falsely inflated income to approve them for the refinance. She also claims that if Defendants had looked into the income at all, they would have known the amount stated was inflated. It is unclear who actually inflated the amount, but it appears to have been done by the mortgage broker (who is not named as a defendant), unbeknownst to Plaintiff. Plaintiff further claims she signed the loan application after the loan closed and the three-day recession period had passed, and was unaware up to that point that an inflated income amount had been used.

In the previous Findings and Recommendations, the court advised Plaintiff as to what was required to state a claim for fraud, including all of the elements required under California law. In granting the prior motion to dismiss, the court agreed with Defendants' argument that Plaintiff failed to allege any actual wrong doing by Defendants. Instead, it appeared that she was basing her complaint on Defendants' reliance on the wrong information, not that they actually did anything wrong. In addition, she appeared to be claiming TILA violations, but did not specify what those violations were. To the extent she was seeking damages, the court observed that those claims were likely untimely under the one year statute of limitations. However, she was also requesting rescission, which has a three year statute of limitations. The court therefore allowed her leave to amend on both her fraud claim and TILA claim (to the extent she is claiming rescission).

In her amended complaint, Plaintiff continues to name only National City Mortgage, National City Bank.*fn2 She does identify the mortgage broker (Jayme Dalglish) who submitted her application, but does not name her (or her brokerage, Pinnacle Mortgage Company) as a defendant.*fn3 She claims the Defendants' underwriter, Waylon Henry, received the loan documents, found the income listed therein to be reasonable, and approved the loan. He also allegedly noted the income was documented and calculated correctly, which Plaintiff alleges was untrue. She states Waylon Henry is the one responsible for the false income amount because he is the one who entered it into the online loan application. However, had Waylon Henry looked into the amount of income claimed, he would have found it unreasonable given her husband's position as a Wal-Mart employee, where the average Wal-Mart employee only makes $1900 a month. She claims that "she was ignorant of defendants' secret intention to generate and then rely on a fraudulent Form 1003." She further states the loan "had no benefit" to her, although she acknowledges she obtained a lower interest rate, because her monthly payments remained the same, and her equity was stripped. She therefore claims the exchange lacked consideration.

The amended complaint alleges two counts of fraud ("fraud for profit" and "fraud for house"), undue influence, and "rescission." She again cites the TILA, but does not specify she is claiming a violation thereof (except to the extent she is claiming the Defendant failed to find she actually had the ability to repay the loan).

II. Motion to Dismiss


Defendant brings this motion to dismiss the amended complaint on the grounds that it also fails to state a claim and the case is barred by the statute of limitations. It argues the complaint fails to state the "how, when, where, to whom, and by what means" required to state a claim for fraud. In addition, the complaint fails to specify the names of the persons at PNC Bank who made any alleged misrepresentation, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. Plaintiff also fails to support her claim for fraud by failing to allege facts suggesting why Defendants should have suspected the income was inaccurate, especially given that Plaintiff's husband had been employed at the same place for 12 years, they both signed an affidavit that the loan application was accurate, and had signed another application with the same information. Again, Plaintiff's complaint does not allege any misrepresentation by PNC Bank, but rather that her mortgage broker included inaccurate information on the application. Nor does Plaintiff allege that PNC Bank knew the application contained false information. Finally, Plaintiff fails to allege facts demonstrating damage.

Defendants also argue that Plaintiff fails to plead facts warranting rescission under a theory of fraud, undue influence, or failure of consideration. Plaintiff does not, and cannot, argue PNC Bank (as the lender) had any fiduciary duty to her (unlike her mortgage broker, who acted as her agent not an agent of the lender). For a claim of undue influence, Plaintiff had to plead facts demonstrating a confidential relationship, and that she lacked mental vigor - neither of which were plead. In addition, Defendants argue Plaintiff's claim of lack of consideration fails because it is clear that Plaintiff received consideration in that she admits the purpose of the new loan was to consolidate her other two, which in fact happened, and the lack of any "cash out" does not equal "no consideration." Defendants also argue Plaintiff's request for rescission fails because she did not elect rescission promptly, and she fails to allege valid and viable tender of payment in order to restore the parties to their original position.

As to Plaintiff's claims of TILA violations, Defendants argue she fails to specify any actual violations. Instead she just mentions possible violations regarding the notice of right to cancel. Any claim for damages under TILA would be time barred and a claim for rescission based on her claim that she should have been provided with an additional notice of right to cancel after the consummation of the loan, is not a valid claim. She also fails to allege valid and viable tender of payment to return the parties to the status quo ante.

In the alternative Defendants request a more definite statement due to the vagueness of Plaintiff's claims.

In opposition, Plaintiff states Defendants' arguments are inaccurate. She claims she did not sign any of the loan documents until three days after the loan funded,*fn4 and she was not aware that the mortgage broker provided the inaccurate income information. In terms of her claim for fraud, she attempts to clarify the who, what, when, where, how by identifying that her claim is against a notary public (Betty Bigford), who asked Plaintiff to sign the affidavit of financial status, saying, "this just means that you're not lying about your income." She further attempts to clarify this occurred on February 14, 2007, at Chicago Title Company in Redding, California, and was done with the intent to earn a payment from Defendant (i.e. commission) by ...

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