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Vanduzen v. Homecomings Financial

May 10, 2010


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


Defendants Homecomings Financial LLC ("Homecomings") and Mortgage Electronic Registration Systems, Inc. ("MERS") (collectively, "Defendants") filed a motion to dismiss Plaintiff's Second Amended Complaint ("SAC") under Federal Rule of Civil Procedure ("Rule") 12(b)(6) for failure to state a claim upon which relief can be granted and Rule 9(b) for failure to plead fraud with sufficient particularity. Plaintiff's claims concern a refinanced loan she obtained on her residential property.

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.

Defendants request that judicial notice be taken of the August 25, 2006 Deed of Trust, which is publicly recorded in the Official Records of Sacramento County. (Request for Judicial Notice ("RJN") Ex. A.) "[A]s a general rule, a district court may not consider materials not originally included in the pleadings in deciding a Rule 12 motion[,] . . . [however,] it may take judicial notice of matters of public record and may consider them without converting a Rule 12 motion into one for summary judgment." United States v. 14.02 Acres of Land, 547 F.3d 943, 955 (9th Cir. 2008) (quotations and citations omitted). Exhibit A is publicly recorded and may be considered in deciding Defendants' dismissal motion.

II. Plaintiff's Factual Allegations

In July 2006, Plaintiff Renee Vanduzen sought to refinance her residential property located at 203 Cedar Rock Circle in Sacramento County, California. (SAC ¶ 25; RJN Ex. A.) Plaintiff met with RJ Berryessa Mortgage loan officer Chanh Nguyen ("Nguyen"), who informed Plaintiff he could get her the "best deal" and the "best interest rates" available on the market. (SAC ¶ 26.) "Plaintiff's FICO score was not sufficient to obtain a loan under standard underwriting guidelines," so Nguyen offered to "fix" Plaintiff's credit score for a $1,500 fee, which Plaintiff paid. (Id. ¶ 27.) Nguyen assured Plaintiff "he would obtain for her a fixed rate loan at [a] 7% interest rate." (Id. ¶ 29.) "Nguyen further assured Plaintiff that her payments would be approximately $1,400[] per month." (Id.) "Nguyen actually sold Plaintiff a residential mortgage loan to refinance her [p]roperty totaling $297,000[]." (Id. ¶ 30.) The loan included an interest rate which adjusted from 8.5% to 14.5% and carried an initial monthly payment of $2,151.33. (Id.) Nguyen informed Plaintiffs that if the loan ever became unaffordable, he would refinance the loan. (SAC ¶ 32.)

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. ¶ 34.) 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.)

On August 21, 2006, Plaintiff completed the loan transaction. (Id. ¶ 36.) The terms of the loan were memorialized in a promissory note, which was secured by a deed of trust. (Id.) The deed of trust identified First American Title Company as trustee and Defendant Ownit Mortgage Solutions, Inc. as lender. (Id.) The Deed of Trust also identified MERS as beneficiary and nominee for the lender and the lender's successors and assigns. (SAC ¶ 37.) Plaintiff alleges MERS is "engaged in the business of holding title to mortgages." (Id. ¶ 10.)

On or about November 1, 2006, Homecomings began demanding mortgage payments. (Id. ¶ 38.) The payments demanded ranged from $2,151.33 to $2,258.89. (Id. ¶ 39.) The balance of the mortgage has risen to $307,000. (Id.)

Plaintiff sent a Qualified Written Request ("QWR") to Homecomings pursuant to the Real Estate Settlement Procedures Act ("RESPA") on April, 2009, in which Plaintiffs demanded rescission of the loan under the Truth in Lending Act. (Id. ¶ 40.) Homecomings has yet to respond to the QWR. (SAC ¶ 40.)

Plaintiff alleges the following five claims against Homecomings: (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, et seq.. Plaintiff alleges the following three claims against MERS: (1) negligence; (2) ...

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