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Brown v. GMAC Mortgage

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA


May 21, 2010

LORRAINE BROWN, PLAINTIFF,
v.
GMAC MORTGAGE, LLC; GREENPOINT MORTGAGE FUNDING, INC.; ETS SERVICES, LLC, DEFENDANTS.

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

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS*fn1

Defendants GMAC Mortgage, LLC ("GMAC") and ETS Services, LLC ("ETS") (collectively, "Defendants") filed a motion to dismiss Plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. Defendant Greenpoint Mortgage Funding, Inc. filed a "Joinder of [GMAC and ETS'] Motion to Dismiss" which is stricken since it fails to comply with the notice requirement of the applicable Local Rule. For the following reasons, Defendants' motion is granted in part and denied in part.

I. FACTUAL ALLEGATIONS AND PLAINTIFF'S CLAIMS

This case concerns a mortgage loan Plaintiff obtained on her property and a subsequent foreclosure sale of her property. "On or about September 6, 2006, [P]laintiff executed a promissory note for $313,600 in favor of Greenpoint, which . . . was secured against the Property by a deed of trust recorded on September 27, 2006 as instrument number 000452727453 in the office of the Sacramento County Recorder." (Compl. ¶ 12.) "Thereafter, GMAC, in a capacity as lender/beneficiary and loan servicer, and ETS, in a capacity as trustee of the subject deed of trust, purportedly acquired an interest in the aforesaid note and deed of trust by way of assignment, endorsement, merger, or operation of law." (Id. ¶ 13.) "On May 29, 2009, at 8:30 a.m., [P]laintiff faxed defendants written notices of rescission of the subject loan pursuant to the Truth in Lending Act . . . ." (Id. ¶ 14.) "On May 29, 2009, at approximately 10:30 a.m., defendants . . . caused the property to be sold to GMAC at public auction." (Id. ¶ 15.)

Plaintiff alleges the following five claims against GMAC: (1) violation of the Home Ownership and Equity Protection Act, 15 U.S.C. § 1639 ("HOEPA"); (2) violation of the Truth in Lending Act, 15 U.S.C. §§ 1601, et seq. ("TILA"); (3) wrongful foreclosure; (4) breach of the implied covenant of good faith and fair dealing; and (5) "set aside trustee's sale". Plaintiff alleges the following two claims against ETS: (1) wrongful foreclosure; and (2) "set aside trustee's sale".

II. 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.

III. Discussion

A. HOEPA

Defendants seek dismissal of Plaintiff's HOEPA claim, arguing Plaintiff has not alleged facts showing that HOEPA is applicable to her loan. (Defs.' Mot. 5:13-6:5.) Plaintiff responds she "has stated a claim for violation of HOEPA" but "to the extent she has not adequately plead[ed] that the subject loan was covered under HOEPA, she seeks leave to amend." (Opp'n 2:10-23.)

HOEPA applies only to "a special class of regulated loans that are made at higher interest rates or with excessive costs and fees." Lynch v. RKS Mortg. Inc., 588 F. Supp. 1254, 1260 (E.D. Cal. 2008) (quotations and citations omitted). "In order to be subject to the protections afforded by HOEPA, one of two factors has to be established. Either the annual percentage rate of the loan at consummation must exceed by more than [8] percent the applicable yield on treasury securities, or the total points and fees payable by the consumer at or before the closing has to be greater than 8 percent of the total loan amount, or $400.00." Lynch, 588 F. Supp. 2d at 1260; see also 12 C.F.R. § 226.32(a)(1)(i) (stating that the annual percentage rate may not exceed the yield on treasury securities by more than "8 percentage points for first-lien loans, or by more than 10 percentage points for subordinate lien loans.").

Plaintiff has not alleged facts "demonstrat[ing] that the mortgage [she] obtained qualified for protection under HOEPA . . ." Lynch, 588 F. Supp. 2d at 1260. Therefore, since Plaintiff has not adequately pleaded her loan is covered by HOEPA, and she has requested leave to amend this claim, Plaintiff's HOEPA claim is dismissed as to all defendants in this action.

B. TILA

Defendants also seek dismissal of Plaintiff's TILA claim for damages alleged against GMAC, arguing it is time-barred by the one-year statute of limitations. (Defs.' Mot. 4:25, 6:19.) Plaintiff does not respond to this portion of Defendants' motion. Rather, Plaintiff argues she timely filed her notice of rescission of her loan. However, Plaintiff has not stated a TILA rescission claim against GMAC. Plaintiff alleges Greenpoint, not GMAC, owned the property at the time she gave notice of rescission. Plaintiff has not alleged that GMAC ever received a subsequent notice of rescission; nor has she alleged that GMAC had notice of the first notice of rescission. Further, Plaintiff does not allege she seeks rescission under her TILA claim; nor does she allege she seeks rescission in her Prayer for Relief. Rather, she alleges she seeks "economic and non-economic damages." (Compl. ¶ 21.)

Actions under TILA for actual or statutory damages must be brought "within one year from the date of the occurrence of the violation." 15 U.S.C. § 1640(e). "[A]s a general rule[,] [this] limitations period starts [to run] at the consummation of the transaction." King v. California, 784 F.2d 910, 915 (9th Cir. 1986.) "Consummation" is defined under TILA as "the time that a consumer becomes contractually obligated on a credit transaction." Grimes v. New Century Mortg. Corp., 340 F.3d 1007, 1009 (9th Cir. 2003) (quoting 12 C.F.R. § 226.2(a)(13)). However, the doctrine of equitable tolling may "suspend the limitations period" "in certain circumstances," such as where the allegations in the complaint permit a reasonable inference that the borrower did not have a reasonable opportunity to discover the alleged fraud or nondisclosures that form the basis of the Plaintiff's TILA claim. Id. at 914-15; Al-Kidd, 580 F.3d at 956.

Plaintiff alleges the TILA violations occurred on September 6, 2006, the date Plaintiff entered into the loan agreement and consummated the loan transaction. (Compl. ¶ 12.) Since Plaintiff did not bring her TILA damages claim until August 28, 2009, which is well over one year after the September 6, 2006 date on which the loan transaction was consummated, Plaintiff brought this claim after the one-year statute of limitations period. Further, Plaintiff fails to allege any facts in her Complaint which would permit drawing a reasonable inference that she did not have an opportunity to discover the alleged fraud or nondisclosure that form the basis of her TILA damages claim before the limitations period expired. Therefore, Plaintiff's TILA damages claim against GMAC is dismissed.

C. Plaintiff's State Claims

Defendants also seek dismissal of Plaintiff's state claims. However, Defendants have not shown that these claims are insufficiently plead. Therefore, Defendants' motion to dismiss Plaintiff's state claims is denied.

IV. Conclusion

For the stated reasons, Defendants' motion to dismiss is granted in part and denied in part. Plaintiff is granted leave to amend any claim that has been dismissed, provided that the amended complaint is filed within fourteen (14) days of the date on which this order is filed.


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