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Ayala v. Bank of America

April 16, 2010


The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge


Defendants Bank of America and Guild Mortgage Company have both filed Motions to Dismiss [Docs. 26, 27]. Plaintiff has not opposed them. For the following reasons, the Court GRANTS the Motions and DISMISSES the Complaint in its entirety.


In May 2006, Plaintiff borrowed $336,000 and $84,000 from Defendant Guild Mortgage Company in two separate loans to purchase real property at 7526 Zemco Drive, Lemon Grove, California 91945. When he executed the loans, Plaintiff did not receive a Notice of Right to Cancel and "other related [m]aterial" which Plaintiff contends was required by the Truth in Lending Act ("TILA").

In July 2006, Guild Mortgage assigned the loans to "Impac Funding Corporation, in care of Countrywide Home Loans in violation of the 'TILA.'" (Compl. ¶ 11.) Then in October 2008, "Countrywide Home Loans had sold the subject property to" Defendant Bank of America. (Id. at ¶ 12.)

Plaintiff then alleges a confusing set of facts. In November 2007, over a year after Plaintiff obtained the original loans, two people named Farnum and Wiekle, on behalf of Guild Mortgage, told Plaintiff that he was qualified for the loans in question. And they falsified an "'obligations of person under its note' in the amount of an adjustable interest rate to its advantage. By doing so, these Defendants represented to the Federal Government that Plaintiff had a sufficient credit score to ascertain and make payment on the 'obligations of person under its note' in question. In reliance upon these representations, and Guild Mortgage Company issued a loan to Plaintiff in the amount aforementioned." (Id. at ¶¶ 13--14.) It is unclear whether Plaintiff alleges that in November 2007 he borrowed new amounts, whether he executed new documents related to his original loans, or whether the November 2007 date is a typographical mistake.

In any event, Plaintiff admits he could not make his monthly payments on the loans and defaulted. (Compl. ¶ 20.)

Plaintiff alleges the following causes of action: (1) fraud and misrepresentation, (2) conspiracy to defraud, (3) breach of contract, (4) breach of covenant of good faith and fair dealing, (5) intentional infliction of emotional distress, (6) negligent infliction of emotional distress, (7) injunctive relief, and (8) declaratory relief.


Under Federal Rule of Civil Procedure 8(a)(2), the plaintiff is required only to set forth a "short and plain statement of the claim showing that the pleader is entitled to relief," and "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). When reviewing a motion to dismiss, the allegations of material fact in plaintiff's complaint are taken as true and construed in the light most favorable to the plaintiff. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). But only factual allegations must be accepted as true-not legal conclusions. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Although detailed factual allegations are not required, the factual allegations "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Furthermore, "only a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 129 S.Ct. at 1949.


A. First Cause of Action -- Fraud and Misrepresentation

There are at least two reasons to dismiss Plaintiff's claim for fraud and misrepresentation. First, claims for fraud have a three-year statute of limitations. Cal. Code Civ. Proc. § 338(d). Plaintiff alleges the Defendants committed fraud when they told him his income was sufficient to make payments on the loans. Plaintiff executed the loans in May 2006, but he filed this action in August 2009, which is beyond the three-year period. Although the claim may be subject to tolling, Plaintiff has not alleged a basis for tolling.

Second, even if Plaintiff filed this action within the limitations period, he has not pled the elements of fraud with specificity. The elements of fraud are "(1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another's reliance on the misrepresentation, (4) justifiable reliance, and (5) resulting damage." Conroy v. Regents of Univ. of California, 45 Cal. 4th 1244, 1255 (2009). Not only has Plaintiff failed to allege each element with the requisite level of specificity, Plaintiff is unable to allege justifiable reliance on Defendants' alleged misrepresentations regarding the loan because Plaintiff had access to and signed the loan documents. Brookwood v. Bank of America, 45 Cal. App. 4th 1667, 1674 (1996) ("Reliance on an alleged ...

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