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Kopchuk v. Countrywide Financial Corp.

March 15, 2010


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


This matter is before the court on the motion of defendants Countrywide Financial Corporation ("Countrywide"), Recontrust Company, N.A. ("Recontrust"), and Mortgage Electronic Registration System ("MERS") to dismiss plaintiff Oksana Kopchuk's ("plaintiff") first amended complaint pursuant to Federal Rule of Civil Procedure ("FRCP") 12(b)(6). (Docket No. 12). Plaintiff opposes the motion. For the reasons set forth below,*fn1 defendants' motions are GRANTED.


Plaintiff brings this action against defendants Countrywide, Recontrust, and MERS. (Pl.'s First Am. Compl. ("Compl."), filed Sept. 10, 2009, ¶¶ 2-4.) Plaintiff's claims are based upon a residential home loan transaction and the subsequent impending foreclosure of plaintiff's home. (Id. ¶¶ 7, 28.) Plaintiff, who is not fluent in English, bases several claims on defendants' failure to provide plaintiff with copies of documents in her native Slavic language. (Id. ¶ 9, 36.) Additionally, plaintiff alleges that defendant Countrywide acted as a "predatory lender" by misrepresenting the terms of plaintiff's loan and by failing to provide plaintiff with accurate disclosures.*fn2 (Id. ¶¶ 13-15.) All defendants have moved to dismiss the action for failing to state any claims upon which relief could be granted. Fed. R. Civ. P. 12(b)(6).


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 the 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." Twombly, 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 Twombly, 550 U.S. at 570). 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.


A. Defendants' 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). Rule 201 permits a court to take judicial notice of an adjudicative fact "not subject to reasonable dispute" because the fact is either "(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). The court can take judicial notice of matters of public record, such as pleadings in another action and records and reports of administrative bodies. See Emrich v. Touche Ross & Co., 846 F.2d 1190, 1198 (9th Cir. 1988).

"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).

Plaintiff's complaint alleges several causes of action that are premised on defendants' failure to provide the disclosures and number of copies of the Notice of Right to Cancel as required by TILA. (Compl. ¶ 39.) Defendants' Exhibits D, E, and F are a copy of a Notice of Right to Cancel, a TILA Disclosure Statement, and a document entitled "Itemization of Amount Financed," respectively. All three documents bare plaintiff's signature and plaintiff does not contest their accuracy. Accordingly, as these documents form the basis of certain causes of action, the court considers them and assumes that the contents are true for the purpose of this motion to dismiss. Ritchie, 342 F.3d at 908.

B. Violation of 15 U.S.C. § 1639(H) and HOEPA

Plaintiff's ninth and thirteenth causes of action are based on violations of 15 U.S.C. § 1639, the Home Ownership and Equity Protection Act ("HOEPA"), which is an amendment to the Truth in Lending Act. (Compl. ¶¶ 85, 123.) Defendants argue that plaintiff fails to state a claim for relief under HOEPA because the loan at issue was used to purchase her primary residence, and therefore, it is not subject to the additional requirements of HOEPA.

HOEPA mandates additional disclosures to the borrower for mortgages which meet certain requirements. 15 U.S.C. § 1639. Explicitly exempted from the provisions of HOEPA are "residential mortgage transactions." 15 U.S.C. § 1602(aa)(1). Residential mortgage transactions are, in turn, defined as "a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained against the consumer's dwelling to finance the acquisition or initial construction of such dwelling." 15 U.S.C. § 1602(w). Plaintiff's loan meets the definition of a residential mortgage transaction. She alleges in her complaint that she used the money which she borrowed from Countrywide to acquire the home in question and that home is her dwelling. (Compl. ¶¶ 1, 7, 110.) Therefore, plaintiff cannot state a claim for relief under HOEPA because the loan transaction is not of the type that triggers the additional requirements of Section 1639.

Accordingly, defendants' motion to dismiss plaintiff's ninth and thirteenth claims for relief is GRANTED without leave to amend.


Plaintiff's twelfth claim for relief is for a violation of TILA against defendant Countrywide.*fn3 Plaintiff asserts that Countrywide underdisclosed the finance charge and annual percentage rate ("APR") of plaintiff's loan by failing to include a $957 charge in the disclosures made to plaintiff at the time of the loan. (Compl. ¶ 111.) Plaintiff also claims that defendant failed to provide two copies of the notice of the right to rescind, and that defendant did not properly disclose the amount financed, the finance charge, and the total of payments as required by TILA. (Id. at ¶¶ 111-13.)

Defendant moves to dismiss on the ground that plaintiff's TILA claim is barred by the statute of limitations. Plaintiff did not respond to defendants' argument her opposition to the motions. However, based on plaintiff's statement in her complaint asserting she did not discover the alleged TILA disclosure violations until on or about April 15, 2009, the court will construe plaintiff's pleading as alleging that the statute of limitations should be equitably tolled. (Compl. ¶ 111.)

TILA violations include the failure to provide the required disclosures mandated by 15 U.S.C. § 1631, and the failure to clearly and conspicuously disclose information relating to the "annual percentage rate" and the "finance charge" pursuant to 15 U.S.C. § 1632. To recover damages arising from alleged TILA violations, a plaintiff must file an action to recover damages "within one year from the date of the occurrence of the violation." 15 U.S.C. § 1640(e). However, in certain circumstances, equitable tolling of civil damages claims brought under TILA is appropriate. See King v. State of California, 784 F.2d 910, 915 (9th Cir. 1986). The doctrine of equitable tolling may be appropriate when the imposition of the statute of limitations would be unjust or would frustrate TILA's purpose "to assure a meaningful disclosure of credit terms so that the consumer will be able to . . . avoid the uninformed use of credit." Id. (quoting 15 U.S.C. § 1601(a)). District courts, therefore, have the discretion to evaluate specific claims of equitable tolling and adjust the limitations period accordingly when the borrower may not have had a reasonable opportunity to discover the fraud or nondisclosures that give rise to the TILA action. Id.

In this case, plaintiff alleges she consummated the loan on or about April 10, 2007. (Compl. ΒΆ 73.) The Deed of Trust is dated that same day. (Defs.' Ex. A. to RJN, filed Dec. 17, 2009.) Accordingly, as plaintiff did not bring the instant action until April 23, ...

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