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Abeel v. Summit Lending Solutions

April 9, 2010

BRIAN ABEEL; DEBORAH ABEEL, PLAINTIFFS,
v.
SUMMIT LENDING SOLUTIONS, INC.; OVER STATE LAW CLAIMS; NDEX WEST, LLC, INDYMAC MORTGAGE SERVICES, A DIVISION OF ONEWEST BANK, FSB.; GUARANTY RESIDENTIAL LENDING, INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., DEFENDANTS.



The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge

ORDER GRANTING MOTION TO DISMISS, OR ALTERNATIVELY FOR SUMMARY JUDGMENT; DECLINING TO EXERCISE SUPPLEMENTAL JURISDICTION DENYING MOTION FOR TEMPORARY RESTRAINING ORDER AS MOOT

Defendants NDEX West, LLC ("NDEX") and Onewest Bank, FSB ("Onewest") move to dismiss the First Amended Complaint ("FAC") for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) or, alternatively, for summary judgment pursuant to Fed.R.Civ.P. 56. Plaintiffs Brian Abeel and Deborah Abeel move for a temporary restraining order ("TRO") to prevent the scheduled foreclosure sale of their home. All motions are opposed. Pursuant to Local Rule 7.1(d)(1), this matter is appropriate for decision without oral argument. For the reasons set forth below, the court grants the motion to dismiss, or in the alternative for summary judgment, and dismisses all federal claims with prejudice; declines to exercise supplemental jurisdiction over the state law claims; and denies the TRO as moot. The Clerk of Court is instructed to close the file.

BACKGROUND

The FAC, filed on February 3, 2010, alleges two federal claims for violation of RESPA, 12 U.S.C. §2605 et seq., and the Truth In Lending Act ("TILA"), 15 U.S.C. §1601 et seq. Plaintiff also asserts supplemental jurisdiction pursuant to 28 U.S.C. § 1367 over the four state law claims for intentional misrepresentation, breach of fiduciary duty, quiet title and violation of Cal. Bus. Prof. Code §17200. Plaintiff alleges that defendant NDEX "is or was" acting in the capacity of Trustee on the Trust Deed. (FAC ¶ 4). Defendant Onewest is the current servicing company of the loan. (FAC ¶8).

Plaintiffs claims arise from the March 30, 2005 refinancing of their home, located in Ramona, California. (FAC ¶6). Defendant Guarantee Residential Lending, Inc. ("Guarantee"), an alleged correspondent lender for defendant Indymac, funded the loan in the amount of $650,000. (FAC ¶6). At the time of closing, "Plaintiffs executed a promissory note for the amount borrowed, which was secured by the Trust Deed." Id. Plaintiffs allege that defendant Guarantee misrepresented their income at $14,925 per month when, in actuality their yearly income for 2004 was on average $915 per month. (FAC ¶9). Plaintiffs also allege that the APR was understated by 5.854% (actual 10.017%, stated 4.163%), and the amount financed was understated by $982,465 (actual $1,542,705, stated $560,240). (FAC ¶15).

Plaintiffs also allege that the home was scheduled to be sold at a trustee's foreclosure sale on February 8, 2010. Plaintiffs allege that the scheduled "trustee's sale is invalid as Defendant NDEX was not substituted as Trustee until April 30, 2009, whereas they file the Notice of Default (NOD) on the property on March 23, 2009, while they were not yet trustee on the TD, and therefore had no right or authority to file the NOD." (FAC ¶18).

NDEX and Onewest now move to dismiss the complaint for failure to state a claim or, alternatively, for summary judgment. Plaintiffs move to enjoin the trustee's foreclosure sale from going forward. All motions are opposed.

DISCUSSION

Legal Standards

Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) dismissal is proper only in "extraordinary" cases.

United States v. Redwood City, 640 F.2d 963, 966 (9th Cir. 1981). Courts should grant 12(b)(6) relief only where a plaintiff's complaint lacks a "cognizable legal theory" or sufficient facts to support a cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). Courts should dismiss a complaint for failure to state a claim when the factual allegations are insufficient "to raise a right to relief above the speculative level." Bell Atlantic Corp v. Twombly, __550 U.S. __, 127 S.Ct. 1955 (2007) (the complaint's allegations must "plausibly suggest[]" that the pleader is entitled to relief); Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009) (under Rule 8(a), well-pleaded facts must do more than permit the court to infer the mere possibility of misconduct). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. at 1949. Thus, "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. The defect must appear on the face of the complaint itself. Thus, courts may not consider extraneous material in testing its legal adequacy. Levine v. Diamanthuset, Inc., 950 F.2d 1478, 1482 (9th Cir. 1991). The courts may, however, consider material properly submitted as part of the complaint. Hal Roach Studios, Inc. v. Richard Feiner and Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989).

Finally, courts must construe the complaint in the light most favorable to the plaintiff. Concha v. London, 62 F.3d 1493, 1500 (9th Cir. 1995), cert. dismissed, 116 S.Ct. 1710 (1996). Accordingly, courts must accept as true all material allegations in the complaint, as well as reasonable inferences to be drawn from them. Holden v. Hagopian, 978 F.2d 1115, 1118 (9th Cir. 1992). However, conclusory allegations of law and unwarranted inferences ...


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