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Linder v. Aurora Loan Servicing

April 14, 2010



This matter comes before the Court on Defendant Aurora Loan Services, LLC's, ("Defendant's") Motion to Dismiss Plaintiff Steve Linder's ("Plaintiff's") Complaint ("Complaint")for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff opposes the motion.*fn1


On April 3, 2007, Plaintiff obtained a loan of $576,000, secured by property located at 2632 Westview Drive, Lincoln, California ("subject property"). The terms of the loan were memorialized in the promissory Note, which was secured by a Deed of Trust on the subject property. Homecomings Financial, LLC, ("Homecomings") was the lender. Defendant was the servicing company for Homecomings.

On September 9, 2009, Quality Loan Service Corp ("Quality"), acting as agent for the beneficiary, Mortgage Electronic Registration Systems, Inc. ("MERS"), recorded a Notice of Default and Election to Sell. On October 21, 2009, MERS substituted Quality as the new Trustee. On December 10, 2009, Quality recorded a Notice of Trustee's Sale of the subject property.

Plaintiff filed his Complaint in state court on November 20, 2009, alleging ten causes of action, including federal and state claims. The Complaint was subsequently removed to this Court.


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 (1975), 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, 1950 (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).

Generally, the Court may not consider material beyond the pleadings in ruling on a motion to dismiss for failure to state a claim. Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. Cal. Mar. 30, 2009) (internal citations omitted). There are two exceptions: when material is attached to the complaint or relied on by the complaint, or when the court takes judicial notice of matters of public record, provided the facts are not subject to reasonable dispute. Id. Here, Defendant requests judicial notice of the Deed of Trust, Notice of Default, Substitution of Trustee and Notice of Trustee Sale. (Request for Judicial Notice ("RJN"), Ex. A, B, C, D). Plaintiff does not dispute the authenticity of these documents, all of which are either matters of public record or relied on by the Complaint. Accordingly, the Court takes judicial notice as requested. The Court will also consider the attachments to Plaintiff's Complaint.

Upon granting a motion to dismiss for failure to state a claim, the court has discretion to allow leave to amend the complaint pursuant to Federal Rule of Civil Procedure 15(a). "Dismissal with prejudice and without leave to amend is not appropriate unless it is clear . . . that the complaint could not be saved by amendment." Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

B. Federal Causes of Action

I. Violation of Truth in Lending Act, First Cause of Action

Plaintiff alleges that Defendant violated the Truth in Lending Act, ("TILA"), 15 U.S.C. §1601 et seq., and seeks damages and rescission. Defendant's alleged violations include failing to provide required disclosure statements, failing to make required disclosure clearly and conspicuously in writing, failing to timely deliver to Plaintiff required notices, and failing to disclose all finance charge details.

An action for damages under TILA must be brought within one year of the violation. 8 U.S.C. §1640(e). A TILA violation occurs on "the date of consummation of the transaction," King v. California, 784 F.2d 910, 915 (9th Cir. 1986), and "consummation" means "the time that a consumer becomes contractually obligated on a credit transaction." 12 C.F.R. §226(a)(13). Accordingly, Defendant argues that the claim for damages is time barred. The doctrine of equitable tolling, however, may "suspend the limitations period until the borrower discovers or had reasonable opportunity to discover the fraud or nondisclosures that form the basis of the TILA action." King, 784 F.2d at 915.

Here, Plaintiff consummated his loan in April 2007, but the Complaint was not filed until November 20, 2009, well over a year after the consummation of the transaction. The Complaint alleges that "[t]he misrepresentations and allegations stated herein were all discovered within the past year, such that any applicable statutes of limitations are extended or should be extended pursuant to the equitable tolling doctrine or other equitable principles." Complaint ¶ 30. Beyond this conclusory statement, the Complaint does not contain any relevant dates or similar information to provide a basis from which to allege equitable tolling. See also Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009) ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). Accordingly, Plaintiff's TILA claim for damages is dismissed, with prejudice.

Plaintiff also brings a claim for rescission under TILA. Plaintiff contends that as a result of Defendant's failure to provide the required disclosures, Plaintiff has a continuing right to rescind the loan under TILA. Defendant argues that Plaintiff's claim for rescission should be dismissed because ...

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