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Espinoza v. Bank of America

May 17, 2010

ROEL ESPINOZA, LIDIA ESPINOZA, PLAINTIFFS,
v.
BANK OF AMERICA, N.A.; BAC HOME LOANS SERVICING, LP; INTEGRITY CAPITAL, LLC; RECONTRUST COMPANY, N.A.; ET AL., DEFENDANTS.



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

ORDER: GRANTING DEFENDANTS MOTION TO DISMISS (Doc. No. 10)

Presently before the Court is Defendants Bank of America, N.A., BAC Home Loans Servicing, LP, and Recontrust Company, N.A.'s motion to dismiss. (Doc. No. 10.) After reviewing the papers and the law, the Court GRANTS Defendants' motion.*fn1

BACKGROUND

"Plaintiffs Roel and Lidia Espinoza . . . are the owners of a single family residence . . . whose address is 6959 Terra Cotta Road, San Diego, CA." (Doc. No. 8 (FAC) ¶ 2.) "On . . . May 11, 2005, Plaintiffs purchased a house as a primary residence in the amount of $573,000." (Id. ¶ 6.) The "financed the Property by signing a note in the amount of $515,100 secured by a first deed of trust from Defendant Countrywide." (Id. ¶ 7.) "After being hired by the Plaintiffs, Defendant Integrity contacted Defendant Bank of America to serve as a lender to the Plaintiffs." (Id. ¶ 8.) Eventually, "Plaintiffs began having difficulty paying their mortgage" and Defendant Recontrust recorded a Notice of Default. (Id. ¶¶ 22--23.)

Plaintiffs filed the complaint in this case January 4, 2010. (Doc. No. 1.) On February 24, 2010, Defendants BAC Home Loans Servicing, L.P, Bank of America, N.A., and Recontrust Company N.A. filed a motion to dismiss. (Doc. No. 6.) On March 12, 2010, Plaintiffs filed a First Amended Complaint (FAC) rather than oppose this motion. The Court then denied Defendants' motion because the filing of the FAC rendered the motion moot. (Doc. No. 9.) Then, on March 29, 2010, Defendants filed the instant motion. (Doc. No. 10.)

LEGAL STANDARD

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.

ANALYSIS

I. INTENTIONAL MISREPRESENTATION

The first cause of action in this matter alleges intentional misrepresentation. (FAC ¶¶ 28--42.) According to the FAC, Defendant Bank of America "failed to disclose numerous federal safeguards in the application process," and "failed to include the Initial Good Faith Estimate or an Initial TIL." (Id. ¶¶ 32--33.)

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).

Because it is a form of fraud, Federal Rule of Civil Procedure 9(b) sets the relevant pleading standard. 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 ...


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