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Somera v. Indymac Federal Bank

March 2, 2010



This matter is before the court on the motions of Quicken Loans ("Quicken"), OneWest Bank, FSB ("OneWest"), and Mortgage Electronic Registration Systems, Inc. ("MERS") (collectively, "defendants") to dismiss plaintiffs' First Amended Complaint pursuant to Federal Rule of Civil Procedure ("FRCP") 12(b)(6) and defendant Quicken's motion to strike pursuant to FRCP 12(f). Plaintiffs Gordon and Delores L. Somera (collectively, "plaintiffs") oppose the motions. For the reasons set forth below, defendants' motions are GRANTED in part and DENIED in part.*fn1


Plaintiffs brought this action against Quicken, OneWest, MERS, NDEX West, LLC ("NDEX"), Indymac Federal Bank, FSB ("Indymac"), Michael Lyon ("Lyon") and Mike George ("George") for conduct arising out of a loan and subsequent foreclosure activity. (Pls.' First Amended Complaint ("Compl."), filed September 29, 2009, ¶¶ 16-54.)

Plaintiffs allege that in January 2006, they were approached by defendants Lyon and George who held themselves out as loan officers employed by Quicken and solicited plaintiffs to refinance their residence, located at 5180 Nile Road, Manteca, CA. (Id. ¶¶ 16-25.) During the loan application process, plaintiffs allege that Lyon and George told plaintiffs that they could get them the "best deal" and the "best interest" rates in the market. (Id. ¶ 23.) Plaintiffs allege that they told Lyon and George that they could no longer afford their $1726.00 monthly mortgage payment. (Id. ¶ 26). Lyon and George allegedly told plaintiffs that they could get plaintiffs "100% refinancing for their residence and that their new loan would be a 30 year fixed rate loan with a 6.50% interest rate," lowering plaintiffs' monthly mortgage payments from $1,726.00 per month to $1,366.76 per month including insurance and taxes. (Id. ¶¶ 23, 29.) Lyon and George also told plaintiffs that if, in the future, plaintiffs could no longer afford their loan, Lyon and George would simply refinance it into an affordable loan. (Id. ¶ 31.) Lyon and George sold plaintiffs a loan for their residence totaling $252,325.00. (Id. ¶ 30.)

Plaintiffs allege that Lyon and George knew or should have known that their representation regarding the terms of the loan were false and misleading. (Id. ¶¶ 28-30.) Plaintiffs claim that instead of selling them a 30-year fixed loan, Lyon and George sold them a loan with a 6.5% variable interest rate that adjusted from a 6.5% interest-only loan after 10 years to a 6.5% principal and interest loan thereafter. Although their mortgage payment started at $1,336.76, that payment adjusted to $1881.27. (Id. ¶ 30.) Plaintiffs further allege that Lyon and George failed to accurately describe plaintiffs' source of income on the loan application. (Id. ¶ 27.)

The loan on the property closed over three years ago on or about March 22, 2006. (Id. ¶ 34.) The terms of the loan were memorialized in a promissory note which was secured by a Deed of Trust on the property. (Id.)

Plaintiffs contend Quicken Loans did not provide them with documents and disclosure required under TILA. (Id. ¶¶ 44, 46.) Specifically, plaintiffs allege that they did not receive the required number of copies of the Notice of the Right to Cancel containing the date that their ability to rescind that transaction expired. (Id. ¶ 44.)

Plaintiffs filed the present action July 16, 2009 alleging claims for (1) violation of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq.; (2) violation of the California Rosenthal Act, California Civil Code §§ 1788 et seq.; (3) negligence; (4) violation of Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2605, et seq.; (5) breach of fiduciary duty; (6) fraud; (7) violation California Business & Professions Code §§ 17200 et seq.; (8) breach of contract; (9) breach of implied covenant of good faith and fair dealing; and (10) wrongful foreclosure.*fn2


A. Motion to Dismiss

Under Federal Rule of Civil Procedure 8(a), a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Under notice pleading in federal court, the complaint must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). "This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). The court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege "'specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief." Twombley, 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." Iqbal, 129 S.Ct. at 1949.

Nevertheless, the court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, "it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Iqbal, 129 S.Ct. at 1949. A pleading is insufficient if it offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555; Iqbal, 129 S.Ct. at 1950 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Moreover, it is inappropriate to assume that the plaintiff "can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Ultimately, the court may not dismiss a complaint in which the plaintiff has alleged "enough facts to state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 (2007)). Only where a plaintiff has failed to "nudge [his or her] claims across the line from conceivable to plausible," is the complaint properly dismissed. Id. at 1952. While the plausibility requirement is not akin to a probability requirement, it demands more than "a sheer possibility that a defendant has acted unlawfully." Id. at 1949. This plausibility inquiry is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950.

B. Motion to Strike

Federal Rule of Civil Procedure 12(f) enables the court by motion by a party or by its own initiative to "order stricken from any pleading . . . any redundant, immaterial, impertinent, or scandalous matter." The function of a 12(f) motion is to avoid the time and expense of litigating spurious issues. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds, 510 U.S. 517 (1994); see also 5A Charles

A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1380 (2d ed. 1990)

Rule 12(f) motions are generally viewed with disfavor and not ordinarily granted because they are often used to delay and because of the limited importance of the pleadings in federal practice. Bureerong v. Uvawas, 922 F. Supp. 1450, 1478 (C.D. Cal. 1996). A motion to strike should not be granted unless it is absolutely clear that the matter to be stricken could have no possible bearing on the litigation. Lilley v. Charren, 936 F. Supp. 708, 713 (N.D. Cal. 1996).


A. Defendants' and Plaintiffs' Exhibits

In ruling upon a motion to dismiss, the court may consider matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. of Mary Hospital, 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. Consumers Union of United States, Inc., 12 F. Supp.2d 1035, 1042 (C.D. Cal. 1998). "Even if a document is not attached to a complaint, it may be incorporated by reference into a complaint if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim." United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). "The defendant may offer such a document, and the district court may treat such a document as part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6)." Id. The policy concern underlying the rule is to prevent plaintiffs "from surviving a Rule 12(b)(6) motion by deliberately omitting references to documents upon which their claims are based." Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998).

Plaintiffs' complaint alleges several causes of action that are premised on defendants' failure to provide certain required disclosures during and after the loan transaction. Accordingly, as these documents form the bases of the relevant causes of action, the court considers them and ...

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