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Bogdan v. Countrywide Home Loans

March 25, 2010


The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge


(Docs. 15 and 17)

I. History*fn1

The claims in this suit arise from two mortgages Plaintiff Erin Bogdan ("Plaintiff") obtained for the purchase of her home at 4684 N. Windward Way, Clovis, CA. In June 2005, Defendant Eric Morales ("Morales") approached Plaintiff about financing a home loan. Morales informed Plaintiff that he was a loan officer for Defendant Home Sweet Home Realty and Mortgage ("Home Sweet"), and that he could get her the best rates and deal for a mortgage. Plaintiff utilized Morales's services in procuring a loan. Plaintiff claims Defendant Anita Roman ("Roman") is the real estate broker of record for Home Sweet. Plaintiff provided Roman with information which showed her monthly income as $3,600. Roman filled out Plaintiff's loan application on which Roman stated (without Plaintiff's knowledge) monthly income as $7,950. Morales advised Plaintiff that she could get financing for 100% of the sale price of the home at a low fixed rate of interest. Plaintiff ultimately got two loans: the first loan had an initial 7.27% rate and the second loan had an initial 11.49% rate, both of which were adjustable. Morales told Plaintiff that if the loan ever became unaffordable, she could refinance.

On June 9, 2006, Plaintiff completed the loans on the Property. Plaintiff was not given a copy of the loan documents prior to closing. At closing, Plaintiff was only given a few minutes to sign; Plaintiff did not have much time to review them. On June 16, 2006, two deeds of trust were filed with the Fresno County Recorder's Office, numbered 2006-0126653 and 2006-0126654. On both deeds, the lender was Defendant Decision One Mortgage Company, LLC ("Decision One") with Defendant Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary and nominee for the lender. The trustee on both was non-party First American Title Insurance Company. On May 29, 2009, Defendant Recontrust Company ("Recontrust" and occasionally referred to by Plaintiff erroneously as Reconstruct) filed a substitution of trustee as to the first deed. The servicer of the first loan is Defendant Countrywide Home Loans, Inc. ("Countrywide"); the servicer of the second loan is Defendant Select Portfolio Servicing, Inc. ("Select Portfolio"). On November 5, 2007, and February 25, 2009, Recontrust filed notice of defaults. Recontrust sent Plaintiff notices of trustee sales on February 6, 2008, and May 27, 2009.

Plaintiff initially filed suit on June 16, 2009. Her amended complaint alleges causes of action for: (1) violation of Truth-in-Lending Act ("TILA") against Decision One; (2) violation of California's Rosenthal Fair Debt Collection Practices Act ("RFDCPA") against Countrywide, Select Portfolio, Decision One, and Recontrust; (3) negligence against all Defendants; (4) violation of Real Estate Settlement Procedures Act ("RESPA") against Countrywide, Select Portfolio, and Decision One; (5) breach of fiduciary duty against Morales, Home Sweet, Decision One, and Roman; (6) fraud against all Defendants; (7) violation of California's Business & Professions Code § 17200 ("UCL") against all Defendants; (8) breach of contract against Countrywide and Decision One; (9) breach of implied covenant of good faith and fair dealing against Countrywide and Decision One; and (10) wrongful foreclosure against Countrywide, Select Portfolio, and Recontrust.

Select Portfolio has filed a motion to dismiss for failure to state a claim. Separately, Countrywide, Recontrust, and MERS (collectively "Moving Defendants") have also filed a motion to dismiss. Plaintiff opposes the motions. The court took the matters under submission without oral argument.

II. Legal Standards

Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)....a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007), citations omitted. "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss. Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged -- but it has not shown that the pleader is entitled to relief." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009), citations omitted. The 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). The court must also assume that "general allegations embrace those specific facts that are necessary to support the claim." Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 889 (1990), citing Conley v. Gibson, 355 U.S. 41, 47 (1957), overruled on other grounds at 127 S.Ct. 1955, 1969. Thus, the determinative question is whether there is any set of "facts that could be proved consistent with the allegations of the complaint" that would entitle plaintiff to some relief. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002). At the other bound, courts will not assume that plaintiffs "can prove facts which [they have] not alleged, or that the defendants have violated...laws in ways that have not been alleged." Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983).

In deciding whether to dismiss a claim under Rule 12(b)(6), the Court is generally limited to reviewing only the complaint. "There are, however, two exceptions....First, a court may consider material which is properly submitted as part of the complaint on a motion to dismiss...If the documents are not physically attached to the complaint, they may be considered if the documents' authenticity is not contested and the plaintiff's complaint necessarily relies on them. Second, under Fed. R. Evid. 201, a court may take judicial notice of matters of public record." Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001), citations omitted. The Ninth Circuit later gave a separate definition of "the 'incorporation by reference' doctrine, which permits us to take into account documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleading." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005), citations omitted. "[A] court may not look beyond the complaint to a plaintiff's moving papers, such as a memorandum in opposition to a defendant's motion to dismiss. Facts raised for the first time in opposition papers should be considered by the court in determining whether to grant leave to amend or to dismiss the complaint with or without prejudice." Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir. 2003), citations omitted.

If a Rule 12(b)(6) motion to dismiss is granted, claims may be dismissed with or without prejudice, and with or without leave to amend. "[A] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc), quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995). In other words, leave to amend need not be granted when amendment would be futile. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir. 2002).

III. Discussion

In the FAC (the operative complaint), Plaintiff lists six causes of action against Select Portfolio: RFDCPA, negligence, RESPA, fraud, UCL, and wrongful foreclosure. Plaintiff lists eight causes of action against Moving Defendants: RDFCPA, negligence, RESPA, fraud, UCL, breach of contract, breach of implied covenant of good faith and fair dealing, and wrongful foreclosure. The TILA and breach of fiduciary duty claims need not be addressed as they are charged against Defendants who have not made any motion to dismiss. Plaintiff has agreed to dismiss the breach of contract and breach of implied covenant of good faith and fair dealing claims against Moving Defendants, so those claims need not be addressed. Plaintiff has also agreed to dismiss the wrongful foreclosure claim against Select Portfolio, but maintains that the cause of action is adequately plead as to Moving Defendants.

Plaintiff's allegations in the FAC are generally vague. Upon review of the remaining six causes of action at issue, the court finds that Plaintiff has failed to state a claim against Select Portfolio and the Moving Defendants. The dismissal of the claims are without prejudice and Plaintiff is ...

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