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Cook v. Wells Fargo Bank

March 26, 2010


The opinion of the court was delivered by: William Q. Hayes United States District Judge


HAYES, Judge

The matter before the court is Defendant Wells Fargo Bank's Motion to Dismiss Plaintiff's Complaint. (Doc. # 4).


This action relates to Plaintiffs' mortgage. On October 29, 2009, Plaintiffs initiated this action by filing their Complaint in the Superior Court for the County of San Diego. (Doc. # 1). The Complaint alleges seven causes of action: (1)Violation of the Truth in Lending Act ("TILA") (Id. ¶ 32), (2) Violation of California's Business and Professions Code § 17200 (Id. ¶ 38), (3) Declaratory Relief (Doc. # 1 ¶ 46), (4) Breach of Fiduciary Duty (Id. ¶¶ 51-60), (5) Constructive Fraud (Id. ¶¶ 55-60), (6) Fraud (Id. ¶¶ 62-68), and (7) Negligent Misrepresentation (Id. ¶¶ 71-74). On December 10, 2009, Defendant Wells Fargo Bank ("Wells Fargo") filed a Notice of Removal removing the action to this Court. (Doc. # 1). On December 17, 2009, Wells Fargo filed its Motion to Dismiss Plaintiff's Complaint. (Doc. # 4).

The Complaint alleges Plaintiffs are the owners of property located at 507 Ocean Bluff Way, Encinitas, California 92024. (Doc. # 1 ¶ 19). The Complaint alleges Plaintiffs obtained a mortgage on their property from Wells Fargo in the amount of $1,500,000.00 on October 19, 2007. (Id. ¶ 20). The Complaint alleges Wells Fargo "acquired a security interest, namely a Deed of Trust, on the Property." (Id. ¶ 22). The Complaint alleges "Plaintiffs paid settlement fees, finance charges, interest and other costs" as part of the loan transaction. (Id. ¶ 21).

The Complaint alleges Plaintiffs mailed a Notice of Rescission rescinding the loan contract pursuant to TILA to Wells Fargo on May 16, 2009, "[a]fter discovering a defective disclosure related to the right to cancel." (Id. ¶ 23). The Complaint identifies 16 instances of "deceptive or misleading disclosures" in the loan contract, which it alleges violate "both state and federal law." (Id. ¶ 27). The Complaint relies on the alleged violations of state and federal law as the basis for its rescission claim, and asserts that these violations extend Plaintiffs' "right to rescind the transaction up to three years after its consummation." (Id. ¶¶ 27-28).

In the Notice of Rescission, Plaintiffs offered to tender "an amount due after appropriate credits are made by [Wells Fargo] to the account." (Id., Ex. 1). The Complaint alleges that Wells Fargo "failed to take any action necessary or appropriate to reflect the termination of any security interest created under the transaction" within 20 days of receipt of the Notice of rescission. (Id. ¶ 25). After Plaintiffs sent the Notice of Rescission, they allege Wells Fargo "indicated that it will proceed with a foreclosure on the property." (Id. ¶ 25).


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. TILA Violations

In support of the first cause of action for violation of TILA, Plaintiffs allege that Wells Fargo failed "to deliver all the material disclosures required by [TILA] to Plaintiffs in connection with the transaction . . . entitling Plaintiffs to actual and statutory damages . . . and extend[ing] their right to rescind the transaction until up to three years after is consummation." (Doc #1 ΒΆ 33). Plaintiffs also request that the Court grant "a temporary restraining order, a temporary injunction and permanent injunction declaring that Plaintiffs have the right to rescind the ...

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