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Ortiz v. Mortgage It

March 9, 2010


The opinion of the court was delivered by: Hayes, Judge


The matters before the Court are the Motion to Strike filed by Defendant Mortgage It, Inc. (Doc. # 23), the Motion to Dismiss (Doc. # 24) filed by Defendant Mortgage It, Inc., and the Motion to Dismiss (Doc. # 27) filed by Defendant America's Service Company.


On August 14, 2009, Plaintiff Yadira Ortiz filed a complaint in the Superior Court of the State of California for the County of San Diego. (Doc. # 1). On September 25, 2009, Defendant Mortgage It, Inc. ("Mortgage It") filed a Notice of Removal joined by Defendant America's Servicing Company ("ASC"). Id. Defendant Homefinders Realty was not served in the state court suit. (See Doc. # 2). On October 28, 2009, Plaintiff filed a First Amended Complaint ("FAC"). (Doc. # 14). The FAC alleges claims for: (1) rescission and damages under the Truth in Lending Act ("TILA"); (2) unfair business practices in violation of California Business and Professions Code § 17200; (3) declaratory relief; (4) breach of fiduciary duty; (5) constructive fraud; (6) fraud; (7) negligent misrepresentation. Id.

On November 16, 2009, Mortgage It filed its Motion to Strike (Doc. # 23) and its Motion to Dismiss (Doc. # 24). On November 17, 2009, ASC filed its Motion to Dismiss. (Doc. # 27). On November 24, 2009, Plaintiff filed an Ex Parte Motion for Temporary Restraining Order. (Doc. # 28). On December 9, 2009, the Court denied Plaintiff's motion. (Doc. # 38).


Plaintiff owns a home in Chula Vista, California located at 1477 Windchime Avenue. (Doc. # 14 at 6). Plaintiff refinanced her mortgage with Defendant Homefinders Realty on May 8, 2007. Id. Plaintiff was an unsophisticated borrower. Id. Homefinders Realty told Plaintiff that she would be able to reduce her monthly payments, but in fact, Plaintiff's mortgage payment increased. Id. at 6-7. Plaintiff's loan became unaffordable in late 2008 and Plaintiff "began exploring the possibility of a refinance." Id. at 7. While researching refinance options, Plaintiff realized the disclosures she received when she refinanced violated state and federal law. Id. Plaintiff was not provided with "the broker's early disclosures." Id. Homefinders Realty's agent failed to "offer a one day inspection prior to the settlement of the transaction." Id. Plaintiff's debt-to-income ratio was 74.98% before her mortgage rate adjusted and 103.601% after her mortgage rate adjusted. Id. at 8. Plaintiff was not properly informed of her right to cancel the loan. Id. at 9. Plaintiff received a document entitled "Right to Cancel," but the document does not include the date when Plaintiff's right to rescind expired. Id. Plaintiff's finance charges were miscalculated, resulting in an overstatement of the finance charges in her loan documents. Id. The interest Plaintiff would be charged was not clearly stated. Id. at 9-10. Plaintiff wrote a letter to ASC and Mortgage It rescinding her mortgage, which voided the loan on December 17, 2008. Id. at 7. However, Defendants "failed to take the required and appropriate actions to reflect the termination of any security interest." Id. at 11.


Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure 8(a) provides: "A pleading that states a claim for relief 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). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

To sufficiently state a claim for relief, a complaint "does not need detailed factual allegations" but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "[A] plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (quoting Fed. R. Civ. P. 8(a)(2)). When considering a motion to dismiss, a court must accept as true all "well-pleaded factual allegations." Ashcroft v.Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1950 (2009). However, a court is not "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see, e.g., Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 683 (9th Cir. 2009) ("Plaintiffs' general statement that Wal-Mart exercised control over their day-to-day employment is a conclusion, not a factual allegation stated with any specificity. We need not accept Plaintiffs' unwarranted conclusion in reviewing a motion to dismiss."). "In sum, for a Complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted).


I. Federal Claim

Plaintiff's only federal law cause of action is a claim for violations of TILA. See Doc. # 14. Plaintiff's TILA claim alleges her loan was made without regard to her ability to pay in violation of 15 U.S.C. ยง 1639(h) because Defendants had a pattern and practice of making loans without regard to the borrower's ability to pay. Id. at 12. The complaint alleges the right to cancel notice "does not have a date the rescission expires... therefore, [] Plaintiff has an extended 3 year right to cancel this loan." Id. at 9. Additionally, the complaint alleges Defendants failed to provide "proper notices" and the documents Defendants did provide included false and misleading disclosures. Id. at 12. The complaint alleges her December 17, 2008 letter rescinding her mortgage was legally effective but Defendants never turned over the property to her. Id. at ...

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