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Woods v. Greenpoint Mortgage Funding

April 27, 2010



Plaintiff Scott W. Woods filed this action against Greenpoint Mortgage Funding, Inc. ("Greenpoint"), GMAC Mortgage ("GMAC"), Aurora Lending Services, LLC ("Aurora"), Lehman Brothers,*fn1 and U.S. Bank National Association as trustee for Greenpoint Mortgage Mortgage Funding Trust Mortgage Pass-Through Certificates, Series 2006-AR7 ("US Bank"), alleging various state and federal claims relating to a loan he obtained to refinance his home in Folsom, California. Greenpoint moves to dismiss plaintiff's First Amended Complaint ("FAC") pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. GMAC, Aurora, and US Bank also move to dismiss plaintiff's FAC pursuant to Rule 12(b)(6). Plaintiff did not timely oppose the motions, and instead filed a Notice of Opposition on April 9, 2010--eleven days late and four days after the court took defendants' motions under submission without oral argument pursuant to Local Rule 230(c). (Docket No. 37.)

I. Factual and Procedural Background

In 2006, plaintiff obtained a loan to refinance his home in Folsom, California. (FAC ¶ 5.) The loan is an adjustable-rate loan in the amount of $1,100,000. (Id.) Greenpoint is listed as the Lender on the promissory note. (Id. ¶ 9.) On August 18, 2008, plaintiff entered into a loan modification with GMAC, who allegedly represented to be the "Lender" under the loan. (Id. ¶ 35.) The loan modification allegedly provided for a reduction in the interest rate for five years. (Id.)

In the course of attempting to determine who the owner of the Note is, plaintiff alleges that in May 2009 GMAC informed him that Aurora is the owner. (Id. ¶ 36.) Aurora allegedly has no record of the loan, or of plaintiff, his address, or social security number. (Id.) Plaintiff allegedly sent Greenpoint and GMAC a Qualified Written Request ("QWR") pursuant to the Real Estate Settlement Procedures Act of 1974 ("RESPA"), 12 U.S.C. §§ 2601-2617, on May 27, 2009. (Id. ¶ 37.) GMAC responded again that Aurora is the owner, and that GMAC is the loan servicer. (Id. ¶ 41.) Greenpoint represented to plaintiff that it sold the loan to Lehman Brothers in August 2006 and transferred the loan servicing to GMAC in October 2006. (Id. ¶ 45.) Plaintiff also alleges that he validly rescinded the loan under the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f, on May 28, 2009, by giving notice to Greenpoint, GMAC, and Aurora. (Id. ¶¶ 23-29.) Aurora responded to plaintiff's Notice of Cancellation on June 4, 2009, by allegedly stating it was unable to locate plaintiff's property in their records. (Id. ¶ 46.)

Plaintiff's counsel allegedly sent a letter to Greenpoint, GMAC, and Aurora on June 15, 2009, to definitively determine the owner of the Note. (Id. ¶ 48.) GMAC responded on June 23, 2009, and allegedly stated that GMAC is the sub-servicer and Aurora is the master servicer of the loan. (Id. ¶ 49.) GMAC allegedly informed plaintiff that his loan is held in a pool of loans for which U.S. Bank acts as trustee. (Id.) On June 27, 2009, Woods allegedly sent U.S. Bank notice of his rescission of the loan. (Id. ¶ 24.) Greenpoint responded on September 16, 2009, allegedly stating and providing documentation that the loan's beneficial interest was transferred from Greenpoint to Aurora on August 16, 2009 and the servicing was transferred to GMAC on October 9, 2006. (Id. ¶ 50.)

Plaintiff alleges that GMAC and Aurora are the servicers of his loan, and that they have failed to disclose the owner of his loan. (Id. ¶¶ 32, 51.) Plaintiff also alleges that defendants understated the interest rate on his loan, failed to make required disclosures, and improperly retained and misapplied funds collected from plaintiff.

On the basis of the allegations above, plaintiff asserts five causes of action against five defendants. Greenpoint's Motion to Dismiss only challenges plaintiff's first cause of action, as it is the only cause of action that complains against Greenpoint. GMAC, Aurora, and US Bank's Motion to Dismiss addresses each of plaintiff's claims.

II. Discussion

On 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 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a motion to dismiss, a plaintiff needs to plead "only enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," and where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 556-57).

In general a court may not consider items outside the pleadings upon deciding a motion to dismiss, but may consider items of which it can take judicial notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). A court may take judicial notice of facts "not subject to reasonable dispute" because they are either "(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201.

Defendants have each submitted a Request for Judicial Notice ("RJN"). Greenpoint's RJN contains four documents: (1) a copy of the Deed of Trust, recorded in the Official Records of Sacramento County on June 30, 2006; (2) a copy of the Note, which is identical to the copy provided by plaintiff in Exhibit G to the FAC; (3) a copy of the Notice of Right to Cancel, which is identical to plaintiff's exhibit C; (4) a copy of the letter dated June 23, 2009, from counsel for GMAC to plaintiff's counsel, which is identical to plaintiff's Exhibit K. The court will take judicial notice of exhibits 1, 2, and 4 in defendant's RJN, as they are matters of public record or whose accuracy cannot be questioned. See Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001). Because plaintiff alleges that he never received this copy of the Notice of Right to Cancel nor signed it (FAC ¶¶ 17-18), the court will decline to take judicial notice of Greenpoint's third exhibit. See Olivera v. Am. Home Mortg. Servicing, Inc., No. 09-3616, 2010 WL 334848, at *4 (N.D. Cal. Jan. 22, 2010) (declining to take judicial notice of alleged Notice of Right to Cancel proffered by defendants where plaintiff challenged its authenticity); see also Morris v. Bank of Am., No. 09-2849, 2010 WL 761318, at *4 (N.D. Cal. Mar. 3, 2010) (same). Defendants GMAC, Aurora, and US Bank's RJN contains two documents: (1) a copy of the Deed of Trust; and (2) a copy of the Notice of Right to Cancel, which is identical to plaintiff's exhibit C. The court will grant judicial notice of (1) and deny judicial notice of (2) for the same reasons explained above.

A. Truth in Lending Act Claim

Plaintiff's first cause of action complains against Greenpoint, GMAC, Aurora, and US Bank. Plaintiff alleges that Greenpoint violated TILA by failing at the origination of the loan to make the "material disclosures," to disclose the finance charge, and to deliver two copies of the notice of the right to rescind as required by TILA. (FAC ¶¶ 13-17.) Rather, plaintiff alleges that he received only one defective copy of the notice of right to cancel from Greenpoint. (Id. ¶ 17.) Plaintiff also alleges that Greenpoint, GMAC, US Bank, and Aurora violated TILA when they did not implement plaintiff's rescission of the loan within twenty days as required by TILA, and when they failed to return any money received by them from plaintiff as part of the loan transaction. (Id. ¶¶ 28-29.) Plaintiff requests both a declaration that the Deed of Trust is now void as a result of plaintiff's prior rescission and damages as the result of these alleged violations.

1. Greenpoint's Motion to Dismiss

Greenpoint presents three reasons why plaintiff's first cause of action should be dismissed against it. First, Greenpoint argues that plaintiff's rescission claim is time-barred under TILA. (Greenpoint Mem. in Supp. of Mot. to Dismiss (Docket No. 25), at 4.) Yet plaintiff does not seek rescission of the loan; indeed, plaintiff alleges that he rescinded the loan by letter on May 28, 2009, (FAC Ex. D (Notice of Cancellation)) and seeks declaratory relief that the security interest is void and damages for defendants' failure to comply with the Notice of Cancellation. As Greenpoint acknowledges, plaintiff has three years from the date ...

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