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Ledesma v. FCM Corp.

March 3, 2010


The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge


Plaintiffs Mario Ledesma, Ruth Ledesma, and Ruth Flores (collectively, "Plaintiffs") brought this action for claims arising from a residential mortgage transaction. (Doc. No. 1). Defendant Wilmington Finance, Inc. ("Wilmington") now moves for summary judgment on all of Plaintiffs' nineteen claims. (Doc. No. 19). The court finds this matter appropriate for disposition without oral argument. See CivLR 7.1(d)(1). For the following reasons, the court hereby GRANTS Wilmington's motion for summary judgment.


On or about October 13, 2006, Plaintiffs purchased a home by obtaining two loans from Defendant FCM Corporation totaling $560,000. (Doc. No. 4, First Amended Complaint, hereinafter "FAC," ¶ 9; Doc. No. 19, Ex. 2, Statement of Uncontested Facts, hereinafter "SUF," ¶ 4). On or about October 27, 2006, Wilmington-who was not involved in the loan origination and did not negotiate the terms of the loan with Plaintiffs-purchased Plaintiffs' loans from FCM Corporation. (SUF ¶ 17). On or about November 29, 2006, Wilmington sold Plaintiffs' loans to two separate investors. (SUF ¶ 25). At all relevant times, Wilmington was a registered mortgage banker in California. (SUF ¶ 2).


Summary judgment is appropriate when "there is no genuine issue of material fact and . . . the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The court must examine the evidence in the light most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). If the moving party, however, "meets its initial burden of identifying for the court the portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact, the nonmoving party may not rely on the mere allegations in the pleadings in order to preclude summary judgment." Nilsson, Robbins, Dalgarn, Berlines, Carson & Wurst v. La. Hydrolec, 854 F.2d 1538, 1542 (9th Cir. 1988) (citing T.W. Elec. Servs. v. Pacific Elec. Contractors Assoc., 809 F.2d 626, 630 (9th Cir. 1987)).


A. Plaintiffs' Rule 56(f) Motion for Continuance

In their opposition, filed as a declaration by defense counsel, Plaintiffs argue that summary judgment is premature at this early stage of litigation, before either party has conducted discovery, and that the court should therefore continue the motion. (Doc. No. 29). Specifically, defense counsel declares that, because discovery has not been conducted, and the requisite disclosures have not been made by the parties, Plaintiffs are prevented from providing the necessary affidavits or depositions that would show that Wilmington's role with respect to the subject loans was not limited, and that Wilmington does not qualify as a "holder in due course" as argued in the moving papers. (Doc. No. 29 ¶ 4).

"If a party opposing [a motion for summary judgment] shows by affidavit that, for specified reasons, it cannot present facts essential to justify its opposition, the court may . . . order a continuance to enable affidavits to be obtained, depositions to be taken, or other discovery to be undertaken." Fed. R. Civ. P. 56(f). To receive relief under Rule 56(f), Plaintiffs "must show (1) that they have set forth in affidavit form the specific facts that they hope to elicit from further discovery, (2) that the facts sought exist, and (3) that these sought-after facts are 'essential' to resist the summary judgment motion." State of Cal. ex rel. Cal. Dep't of Toxic Substances Control v. Campbell, 138 F.3d 772, 779 (9th Cir. 1998).

Defense counsel's declaration does not meet the standard for relief under Rule 56(f). A general reference to the need for discovery is not enough, Plaintiffs must set "forth the particular facts expected from further discovery." Id. Moreover, Wilmington has provided compelling evidence that the facts Plaintiffs would seek-evidence that Wilmington was more than a "holder in due course"-simply do not exist. Plaintiffs' claims stem from two time periods: loan origination on or about October 13, 2006 and foreclosure in July or August of 2009. (Doc. No. 1). Wilmington provides documentation that it purchased the loan from co-defendant FCM Corporation on October 27, 2006 and sold the loan on November 29, 2006. (Kelly Decl. ¶¶ 14, 33). Based on this undisputed evidence, there is no reason to believe that Wilmington had anything to do with either loan origination or foreclosure, or that any facts Plaintiffs might seek in this regard actually exist. Cf. Terrell v. Brewer, 935 F.2d 1015, 1018 (9th Cir. 1991) ("Denial of a Rule 56(f) application is proper where it is clear that the evidence sought is almost certainly nonexistent or is the object of pure speculation.").

As Plaintiffs have failed to carry their burden for relief under Rule 56(f), the court denies their request for further discovery and will rule on Wilmington's motion for summary judgment. See Brae Transp., Inc. v. Coopers & Lybrand, 790 F.2d 1439, 1443 (9th Cir. 1986) ("Failure to comply with the requirements of Rule 56(f) is a proper ground for denying discovery and proceeding to summary judgment.").

B. Plaintiffs' Claims Arising During Loan Origination

Plaintiffs' first claim is for intentional misrepresentation. Plaintiffs claim that "Defendants defrauded Plaintiffs by concealing or suppressing" material facts during the loan origination process. (FAC ¶ 26). Under California law, the elements of fraud are false representation, knowledge of its falsity, intent to defraud, justifiable reliance, and damages. See Bank of the West v. Valley Nat'l Bank of Ariz., 41 F.3d 471, 477 (9th Cir. 1994) (citation and quotation marks omitted). Because Wilmington was not involved in the loan origination, however, Wilmington could ...

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