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Ruiz v. National City Bank

March 16, 2010

ENRIQUE RUIZ, PLAINTIFF,
v.
NATIONAL CITY BANK; JPMORGAN CHASE BANK, N.A. AS SUCCESSOR BY MERGER TO WASHINGTON MUTUAL BANK; LENDER DOE 1; AND LENDER DOE 2, DEFENDANTS.



ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

This matter comes before the Court on Defendant National City Bank's ("Defendant's" or "NCB's"*fn1 ) Motion to Dismiss Plaintiff Enrique Ruiz's ("Plaintiff's") First Amended Complaint ("FAC") for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff opposes the motion.

Defendant also brings a Motion to Strike Portions of the FAC pursuant to Federal Rule of Civil Procedure 12(f), which Plaintiff opposes.*fn2 For the reasons explained below, the Court grants Defendant's Motion to Dismiss. Because Defendant's motion to dismiss is granted, Defendant's motion to strike is moot.

I. FACTUAL AND PROCEDURAL BACKGROUND

According to the FAC, on or around April 12, 2007, Plaintiff entered into two loan refinance transactions with Golden Empire Mortgage, Inc., not a named defendant in this case. The first loan was for $392,000.00, referred to as the "First Deed of Trust" in the FAC, and the second loan was for $49,000.00, the "Second Deed of Trust." Plaintiff claims he did not receive two copies of the "Notice of Right to Cancel" for the First Deed of Trust from Golden Empire Mortgage Company. Plaintiff claims that he did receive two copies of the Notice of Right to Cancel for the Second Deed of Trust from Golden Empire Mortgage Company, but the documents were incomplete and defective.

The First and Second Deeds of Trust are now serviced by defendants NCB and JPMorgan Chase. On May 8, 2009, Plaintiff notified Golden Mortgage Company, Chase, and NCB, that he was making a Qualified Written Request ("QWR"). In the QWR, Plaintiff "pointed out the deficient notice of right to cancel under [TILA]...," and stated he was rescinding his loan, but Plaintiff did not receive a response from any of the defendants within 20 days. A foreclosure sale was conducted in June 2009.

Plaintiff's original complaint alleged causes of action for violation of the Truth In Lending Act, violation of the California Business and Professions Code §17200, violation of the Federal Fair Credit Reporting Act, and Breach of the Covenant of Good Faith and Fair Dealing. The Court granted Plaintiff leave to amend the original complaint. Plaintiff's FAC alleges violations of the Truth In Lending Act ("TILA"), 15 U.S.C. §1601 et seq., and the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §2605 et seq., unfair business practices under California Unfair Competition Law ("UCL"), Breach of Implied Covenant of Good Faith and Fair Dealing, and Slander [Libel] of Credit.

II. OPINION Defendant's Motion to Dismiss

A. Legal Standard

A party may move to dismiss an action for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). In considering a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). Assertions that are mere "legal conclusions," however, are not entitled to the assumption of truth. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To survive a motion to dismiss, a plaintiff needs to plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. Dismissal is appropriate where the plaintiff fails to state a claim supportable by a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

Upon granting a motion to dismiss, a court has discretion to allow leave to amend the complaint pursuant to Federal Rule of Civil Procedure 15(a). "Absent prejudice, or a strong showing of any [other relevant] factor[], there exists a presumption under Rule 15(a) in favor of granting leave to amend." Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2002). "Dismissal with prejudice and without leave to amend is not appropriate unless it is clear... that the complaint could not be saved by amendment." Id. Accordingly, a court should grant leave to amend the complaint unless the futility of amendment warrants dismissing a claim with prejudice.

B. Federal Causes of Action

1. Violations of TILA

Plaintiff alleges that the Defendant violated TILA by failing to respond to Plaintiff's "request for the name, address and telephone number of the true note holder...," thereby holding itself out as the note holder and keeping the identity of the true note holder concealed. FAC ¶¶ 87-88. Defendant is therefore liable to Plaintiff under TILA because Defendant is acting as an agent of the unknown note holder. Id. at ¶ 89-90. Plaintiff seeks rescission and damages from Defendant.

Plaintiff's claims against Defendant for TILA violations fail because Defendant cannot be held liable for a TILA violation under the plain language of the statute. Plaintiff characterizes Golden Empire Mortgage as a "creditor pursuant to [TILA]," and Defendant as a "servicer" or "servicing agent" of his loan. FAC ¶¶ 18, 19, 32. TILA allows civil liability to attach to creditors and assignees of creditors. See 15 U.S.C. §§ 1640(a), 1641(a). Under § 1641(f)(1), loan servicers "shall not be treated as an assignee of [a consumer] obligation for purposes of [TILA] unless the servicer is or was the owner of the obligation." See also Marks v. Ocwen Loan Servicing, 2008 WL 344210, at *2 (N.D. Cal. Feb. 6, 2008) ("Although TILA ...


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