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Altmann v. Indymac Federal Bank

May 7, 2010

ERNEST ALTMANN, PLAINTIFF,
v.
INDYMAC FEDERAL BANK; GREEN TREE SERVICING, LLC; NATIONAL CITY MORTGAGE, A DIVISION OF NATIONAL CITY BANK; FIRST BANK DBA FIRST BANK MORTGAGE; QUALITY LOAN SERVICE CORP.; BANK OF AMERICA; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; GEORGE ROJAS, DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS AND DENYING MOTION TO EXPUNGE LIS PENDENS*fn1

Defendants Mortgage Electronic Systems, Inc. ("MERS") and Green Tree Servicing, LLC ("Green Tree") have each filed a motion under Federal Rules of Civil Procedure ("Rule") 12(b)(6) and 9(b) to dismiss the claims brought against them in Plaintiff's First Amended Complaint ("FAC"). (Docket Nos. 17 and 22.) MERS also filed a motion to expunge an unrecorded lis pendens on the property at issue in this case, which concerns Plaintiff's mortgage loan. (Docket No. 18.) Plaintiff filed a late opposition to MERS's motion to dismiss, but did not file an opposition to either MERS's motion to expunge lis pendens or Green Tree's motion to dismiss. For the reasons stated below, each Defendants' motion to dismiss is GRANTED and the motion to expunge is DENIED.

I. LEGAL STANDARD

A Rule 12(b)(6) motion "challenges a complaint's compliance with . . . pleading requirements." Champlaie v. BAC Home Loans Servicing, LP, No. S-09-1316 LKK/DAD, 2009 WL 3429622, at *1 (E.D. Cal. Oct. 22, 2009). A pleading 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). The complaint must "give the defendant fair notice of what the [plaintiff's] claim is and the grounds upon which relief rests . . . ." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Further, "[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).

To avoid dismissal, the plaintiff must allege "only enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 547. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. Plausibility, however, requires more than "a sheer possibility that a defendant has acted unlawfully." Id. "When a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (quotations and citation omitted).

In evaluating a dismissal motion under Rule 12(b)(6), the court "accept[s] as true all facts alleged in the complaint, and draw[s] all reasonable inferences in favor of the plaintiff." Al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). However, neither conclusory statements nor legal conclusions are entitled to a presumption of truth. See Iqbal, 129 S.Ct. at 1949-50.

II. FACTUAL ALLEGATIONS AND PLAINTIFF'S CLAIMS

In July 2006, Plaintiff Ernest Altmann sought to refinance his residential property located at 6161 Cherokee Road, Stockton, in San Joaquin County, California (the "Property"). (FAC ¶¶ 7, 29.) Plaintiff met with Remien Mortgage Family, Inc. loan officers Robert Remien ("Remien") and George Rojas ("Rojas"), who informed Plaintiff they could get him the "best deal" and the "best interest rates" available on the market. (Id. ¶ 30.) Plaintiff requested a 30-year fixed rate loan with additional "cash" for home improvements. (Id. ¶ 32.) Plaintiff alleges he qualified as a "prime" borrower but that Rojas and Remien classified Plaintiff as "sub-prime" and failed to "disclose other loan program options." (Id. ¶ 31.) Rojas and Remien told Plaintiff the only loan available was an adjustable rate loan, which had a "teaser rate of 1% and carried a prepayment penalty." (Id. ¶ 32.) Rojas and Remien sold Plaintiff a "pick-a-pay" loan for $1,000,000 with an adjustable interest rate of 7%, which would adjust to "almost 10%." (Id.) The loan included an option to pay at a 1% rate, an option that would "negatively amortiz[e the] loan." (FAC ¶ 33.) "Plaintiff was not told of the negative amortizing." (Id.)

"Immediately following the closing of the loan" Rojas and Remien told Plaintiff they had "goofed" the loan and had been unable to obtain "cash" for home improvements. (Id. ¶ 34.) They told Plaintiff he "would have to again refinance." (Id.) "Three weeks later," Rojas and Remien sold Plaintiff two additional loans, the first for $1,000,000 and the second for $125,000. (Id. ¶ 35.) Plaintiff alleges Rojas and Remien "received commissions and yield spread premiums of over $50,000 for the three transactions combined." (Id.) Rojas and Remien informed Plaintiff that if the loan ever became unaffordable, they would refinance the loan. (FAC ¶ 39.)

"At the time of this loan, Plaintiff owned a construction company and made approximately $8,500 per month." (Id. ¶ 36.) Plaintiff alleges Rojas and Remien stated his monthly income as $35,000 on the first loan application and $30,000 per month on the second loan application. (Id.) Plaintiff alleges the "combined payments were over $5,600[] per month." (Id. ¶ 37.)

Plaintiff was not given a copy of the loan documents prior to closing as required, and at the time of closing, Plaintiff was rushed to sign the documents. (Id. ¶ 41.) The loan documents were never explained to Plaintiff, Plaintiff was never given an opportunity to review them, and Plaintiff never received the required copies of the notice of cancellation. (Id.)

Defendant Quality Loan Service Corporation ("Quality Loan") filed a Notice of Default on February 12, 2009, in San Joaquin County, California. (FAC ¶ 48.) Quality Loan noticed the Trustee Sale of the Property on July 21, 2009. (Id. ¶ 49.) Plaintiff sent a Qualified Written Request ("QWR") to Indymac Federal Bank ("Indymac") and Green Tree under the Real Estate Settlement Procedures Act ("RESPA") on April 7, 2009, in which Plaintiff demanded rescission of the loan under the Truth in Lending Act ("TILA"). (FAC ¶ 50.) Neither party has "properly respond[ed]" to the QWR. (Id. ¶ 50.)

Plaintiff alleges the following five claims against Green Tree: (1) violation of the California Rosenthal Act, Cal. Civil Code §§ 1788 et seq.; (2) negligence; (3) violation of RESPA, 12 U.S.C. §§ 2601, et seq.; (4) fraud; and (5) violation of the California Business and Professions Code, Cal. Civ. Code §§ 17200. Plaintiff alleges the following three claims against MERS: (1) negligence; (2) fraud; and (3) violation of the California Business and Professions Code, Cal. Civ. Code §§ 17200.

III. DISCUSSION

A. Plaintiff's Rosenthal ...


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