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Lopez v. Mortgage

June 3, 2010

STEVE LOPEZ AND CARMEN LOPEZ, PLAINTIFFS,
v.
WACHOVIA MORTGAGE INDIVIDUALLY AND AS SUCCESSOR IN INTEREST TO WORLD SAVINGS BANK; COMSTOCK MORTGAGE; DAVID MENDOZA; ADRIAN DEL RIO AND DOES 1-20 INCLUSIVE, DEFENDANTS.



ORDER GRANTING DEFENDANT'S MOTION TO DISMISS AND GRANTING IN PART DEFENDANT'S MOTION TO STRIKE

This matter comes before the Court on Defendant Wachovia Mortgage's ("Defendant" or "Wachovia") Motion to Dismiss (Doc. #49) Plaintiffs Steve Lopez and Carmen Lopez's ("Plaintiffs'") eighth cause of action for violation of the Truth in Lending Act ("TILA")in the Third Amended Complaint ("TAC") (Doc. #44) for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant also brings a Motion to Strike (Doc. #50) portions of the TAC pursuant to Federal Rule of Civil Procedure 12(f).*fn1 Plaintiffs oppose both motions and request an opportunity to file a fourth amended complaint.

I. FACTUAL AND PROCEDURAL BACKGROUND

In June 2006, Plaintiffs obtained an adjustable rate mortgage loan to finance purchase of their residential property located at 10398 Christo Way, Elk Grove, CA ("subject property"). The terms of the loan were memorialized in the promissory Note which was secured by a Deed of Trust on the subject property. The lender was World Savings Bank, renamed and now known as Wachovia. Plaintiffs allege that they did not receive required disclosures, that disclosures were not clear, and that the mortgage brokers misled them regarding the terms of the loan.

Plaintiffs defaulted on the loan in February 2009. Accordingly, in March 2009, Defendant notified Plaintiffs of its intent to foreclose. In April 2009, Plaintiffs sent Defendant a Qualified Written Request ("QWR") under the Real Estate Settlement Procedures Act, ("RESPA"), 12 U.S.C. §2605 et seq., including a demand to rescind the loan under a provision of the TILA, 15 U.S.C. §1601, et seq.

Plaintiffs bring the present lawsuit alleging violations of state and federal law. On October 15, 2009 the Court granted in part and denied in part a Motion to Dismiss the First Amended Complaint ("FAC") filed by Wachovia Mortgage's co-defendants in this action. (Doc. #39). In response to that Order, but prior to the Court deciding Defendant Wachovia Mortgage's Motion to Dismiss, Plaintiffs filed a Second Amended Complaint ("SAC"). (Doc #40). On November 20, 2009, Defendant Wachovia Mortgage's Motion to Dismiss Plaintiffs' SAC was granted, and Plaintiffs were given the opportunity to file a TAC. (Doc # 41). The TAC superseded the SAC and is now the operative complaint at issue in the present order.

II. OPINION

A. Legal Standard

1. Motion to Dismiss

A party may move to dismiss an action for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). In considering a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). Assertions that are mere "legal conclusions," however, are not entitled to the assumption of truth. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To survive a motion to dismiss, a plaintiff needs to plead "enough facts to state a claim to relief that is plausible on its face," Twombly, 550 U.S. at 570, and it is inappropriate to "assume that the [plaintiff] can prove facts that [he or she] has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). Dismissal is appropriate where the plaintiff fails to state a claim supportable by a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

Upon granting a motion to dismiss, a court has discretion to allow leave to amend the complaint pursuant to Federal Rule of Civil Procedure 15(a). "Dismissal with prejudice and without leave to amend is not appropriate unless it is clear . . . that the complaint could not be saved by amendment." Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2002). Accordingly, a court should grant leave to amend the Complaint unless the futility of amendment warrants dismissing a claim with prejudice.

2. Request for Judicial Notice

Generally, the Court may not consider material beyond the pleadings in ruling on a motion to dismiss for failure to state a claim. Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. Cal. Mar. 30, 2009) (internal citations omitted). There are two exceptions: when material is attached to the complaint or relied on by the complaint, or when the court takes judicial notice of matters of public record, provided the facts are not subject to reasonable dispute. Id.

Defendant requests the Court take judicial notice of five exhibits. The exhibits are loan-related documents which are either matters of public record or are relied upon in the TAC. Plaintiffs do not challenge the authenticity of these exhibits. However, Plaintiffs do object to the Court noticing Defendant's summary of the exhibits. Accordingly, ...


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