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Sanchez v. Bear Stearns Residential Mortgage Corp.

May 11, 2010


The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge


Presently before the Court is Defendants Bear Stearns Residential Mortgage Corporation and EMC Mortgage's motion to dismiss. (Doc. No. 24.) Also before the Court are Plaintiff's opposition and Defendants' reply. (Doc. Nos. 26 & 27.) After reviewing these materials, Defendants' motion to dismiss is GRANTED.


The facts of this case were set out in the Court's Prior Order and appear not to have changed in the Second Amended Complaint (SAC). (Doc. No. 22 (Prior Order) at 1--2.) That factual background is incorporated here by reference.

Plaintiff filed this suit on September 21, 2009. (Doc. No. 1.) On October 19, 2009, Defendants filed a motion to dismiss. (Doc. No. 4.) On November 30, 2009, Plaintiff filed his First Amended Complaint (FAC). (Doc. No. 13.) Defendants filed a second motion to dismiss on December 17, 2009, (Doc. No. 15) which the Court granted on February 8, 2010. (Prior Order.) Plaintiff filed his Second Amended Complaint on February 26, 2010. (Doc No. 23 (SAC).) And Defendants filed this motion on March 15, 2010.


Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the defense that the complaint "fail[s] to state a claim upon which relief can be granted," generally referred to as a motion to dismiss. The Court evaluates whether a complaint states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil Procedure 8(a), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief." Although Rule 8 "does not require 'detailed factual allegations,' . . . it [does] demand[] more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, -- US - , 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). "Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 557).

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible when the facts pled "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 556). That is not to say that the claim must be probable, but there must be "more than a sheer possibility that a defendant has acted unlawfully." Id. Facts "'merely consistent with' a defendant's liability" fall short of a plausible entitlement to relief. Id. (quoting Twombly, 550 U.S. at 557). Further, the Court need not accept as true "legal conclusions" contained in the complaint. Id. This review requires context-specific analysis involving the Court's "judicial experience and common sense." Id. at 1950 (citation omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not 'show[n]'-'that the pleader is entitled to relief.'" Id.



Plaintiff's first cause of action is for intentional misrepresentation. In California, the elements of the tort of intentional misrepresentation are "'(1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage.'" Alliance MortgageCo. v. Rothwell, 900 P.2d 601, 608 & n.4 (Cal. 1995) (quoting Molko v. Holy Spirit Ass'n, 762 P.2d 46, 53 (Cal. 1988)). If the allegations are based on concealment, then the plaintiff must show that the party concealing the fact was "bound do disclose it, or . . . [gave] information of other facts which [were] likely to mislead for want of communication of that fact." Cal. Civ. Code § 1710(3).

Further, Federal Rule of Civil Procedure 9(b) governs the pleading of this claim because intentional misrepresentation is a form of fraud. See Cadlo v. Owens-Illinois, Inc., 23 Cal. Rptr. 3d 1, 5 (Cal. Ct. App. 2004); Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1102--03 (9th Cir. 2003). Rule 9(b) states that "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." These allegations must "be 'specific enough to give defendants notice of the particular misconduct . . . so that they can defend against the charge and not just deny that they have done anything wrong.' Averments of fraud must be accompanied by 'the who, what, when, where, and how' of the misconduct charged. '[A] plaintiff must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is false.'" Vess 317 F.3d at 1106 (citations omitted).

According to Defendants, Plaintiff's claim fails because (1) it fails to differentiate between Defendants in its allegations, and (2) it "fails to allege what material facts were allegedly misrepresented by Defendants or that Defendants made any representation at all to Plaintiff." (Memo. ISO Motion at 3--4.) Further, as to Defendant EMC Mortgage, the claim "fails" because "[i]t appears that all representations were made by parties other than EMC since, as evidenced by the recorded title documents, EMC did not originate the subject loans to Plaintiff." (Id. at 3--4.)

The Court finds that this claim must be DISMISSED WITH PREJUDICE as against Defendant EMC. As Defendants point out, the SAC makes no allegations of intentional misrepresentation against Defendant EMC. The first cause of action describes EMC as "the current servicer/lender/beneficiary under the note and/or deed of trust or who was acting on behalf of either the holder of the note or the current beneficiary under the deed of trust when they sold the home in a foreclosure sale to SD Seaport." (SAC ΒΆ 32.) It does not, however, allege that EMC made any misrepresentations or was involved ...

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