The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge
ORDER DISMISSING PLAINTIFFS' FEDERAL CLAIMS AND DECLINING TO EXERCISE SUPPLEMENTAL JURISDICTION OVER PLAINTIFFS' REMAINING STATE LAW CLAIMS*fn1
Defendant Wachovia Mortgage ("Wachovia") filed a motion under Federal Rule of Civil Procedure 12(b)(6) to dismiss Plaintiffs' first amended complaint, and under Federal Rule of Civil Procedure 12(f) to strike certain portions of Plaintiffs' complaint. (Docket Nos. 18, 20.) Wachovia attacks the sufficiency of Plaintiffs' claims and also argues Plaintiffs' state law claims are preempted by the Home Owners Loan Act ("HOLA") and regulations issued thereunder by the Office of Thrift Supervision. Defendants Pelletier Finance Inc. ("Pelletier Finance") and Jeffrey Pelletier also filed a dismissal motion and, in the alternative, they seek a more definite statement under Federal Rule of Civil Procedure 12(e). (Docket No. 21.) Plaintiffs oppose each dismissal motion.*fn2 For the reasons stated below, Plaintiffs' federal claims are dismissed with prejudice and Plaintiffs' state law claims are dismissed without prejudice under 28 U.S.C. § 1367(c)(3). Since the court declines to exercise supplemental jurisdiction over Plaintiffs' state law claims, Wachovia's preemption arguments are not reached.
"A Rule 12(b)(6) motion tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). 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).
However, 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.
Defendant Wachovia's dismissal motion is accompanied by a request that the court consider certain documents which are not part of Plaintiffs' first amended complaint. These documents include four documents related to Wachovia's name change from World Savings Bank, FSB ("World Savings") and its former status as a federal savings bank and four documents related to Plaintiffs' loan transaction. (Wachovia's Request for Judicial Notice ("RJN") Exs. A-G.)
"As a general rule, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (quotations and citation omitted). There are, however, two exceptions to this general rule: the "incorporation by reference" doctrine and matters which are judicially noticed. Id. The "incorporation by reference" doctrine permits a district court "to take into account documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleading." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (quotations and citations omitted). This doctrine is also applicable "to situations in which the plaintiff's claim depends on the contents of a document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document, even though the plaintiff does not explicitly allege the contents of that document in the complaint." Id. (quotations and citations omitted). A document can be "incorporated by reference" into a complaint only if: "(1) the complaint refers to the document; (2) the document is central to plaintiff's claim; and (3) no party questions the authenticity of the document." Delaney v. Aurora Loan Servicing, Inc., No. C 09-3131 VRW, 2009 WL 5062339, at *2 (N.D. Cal. Dec. 23, 2009) (citing Branch v. Tunnell, 14 F.3d 449, 453-54 (9th Cir. 1994)); see also Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (providing factors for when a court may "consider evidence on which the complaint 'necessarily relies'").
A matter may be judicially noticed if it is either "generally known within the territorial jurisdiction of the trial court" or "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b).
Wachovia requests that judicial notice be taken of: 1) its Certificate of Corporate Existence dated April 21, 2006 issued by the Office of Thrift Supervision, Department of the Treasury; 2) a letter dated November 19, 2007 from the Office of Thrift Supervision, Department of the Treasury; 3) Wachovia's charter dated December 31, 2007; and a letter dated November 1, 2009 from the Comptroller of the Currency confirming Wachovia's conversion to a national bank with the name Wells Fargo Bank Southwest, National Association. (Wachovia RJN Exs. A-C.) Wachovia argues these documents are proper for judicial notice since they are copies of official acts or records of departments of the United States. Wachovia further contends these documents show that Wachovia was a federal savings bank subject to HOLA, whose name was changed from World Savings to Wachovia on or about December 31, 2007, and that it is currently a division of Wells Fargo Bank, N.A. Plaintiffs do not oppose Wachovia's request for judicial notice of these documents.
"These documents are properly subject to judicial notice under Federal Rule of Evidence 201." Ibarra v. Loan City, 09-CV-02228-IEG (POR), 2010 WL 415284, at *3 (S.D. Cal. Jan. 27, 2010) (finding judicial notice of documents related to defendant's status as an operating subsidiary of a federal savings association proper); see also Gens v. Wachovia Mortgage Corp., No. CV10-01073 JF (HRL), 2010 WL 1924777, at *2 (N.D. Cal. May 12, 2010) (taking judicial notice of a letter issued by the Office of Thrift Supervision confirming World Savings' request to change its name to Wachovia); Biggins v. Wells Fargo & Co., No. 09-01272, --- F.R.D. ----, 2009 WL 2246199, at *4 (N.D. Cal. July 27, 2009) (taking judicial notice of an order from the Office of Thrift Supervision). Therefore, Wachovia's request that these documents be judicially noticed is granted. Since Wachovia has shown that World Savings changed its name to Wachovia on or about December 31, 2007, Plaintiffs' allegations against World Savings will be construed as allegations against Wachovia.
Wachovia also requests that four documents related to Plaintiffs' loan transaction be considered under the incorporation by reference doctrine: 1) an adjustable rate mortgage note signed by Plaintiffs on April 12, 2005; 2) a deed of trust dated April 12, 2005, listing Plaintiffs as the borrower, and recorded with the official records for the county of San Joaquin on April 19, 2005; 3) federal truth-in-lending disclosure statements dated April 12, 2005 and signed by Plaintiffs; and 4) notices of right to cancel signed by Plaintiffs and dated April 12, 2005. (Wachovia RJN Exs. E-G.) Plaintiff does not oppose Wachovia's request that these documents be considered under the incorporation by reference doctrine.
Since the deed of trust is a publicly recorded document, it may be judicially noticed. See W. Fed. Sav. & Loan Ass'n v. Heflin Corp., 797 F. Supp. 790, 792 (1992) (taking judicial notice of documents in a county's public record, including deeds of trust). The other three documents are referred to in Plaintiffs' first amended complaint, are central to Plaintiffs' claims, and the authenticity of these documents is not disputed. Since these documents are incorporated into the complaint by reference, they may be considered in deciding Wachovia's dismissal motion. See Marder,450 F.3d at 448. Accordingly, Wachovia's request that these documents be considered is granted.
A. Plaintiffs' Allegations
Plaintiffs allege that in January 2005, Defendant Pamela Summers represented she was a loan officer for Defendant Pelletier Finance and solicited Plaintiffs to refinance the loan on Plaintiffs' residence, located at 1373 Evergreen Way in Tracy, California. (First Amended Compl. ("FAC") ¶¶ 7, 33.) Plaintiffs allege that Summers told them "she could get them the 'best deal' and the 'best interest rates' available on the market." (Id. ¶ 34.) Plaintiffs also allege that "Summers advised Plaintiffs that she could get them 100% financing for their residence [and] that their loan would be a fixed rate loan for 30 years." (Id. ¶ 35.)
Plaintiffs allege that on April 12, 2005, they obtained a $362,000 loan from World Savings. (Id. ¶ 43; RJN Ex. E.) The terms of the loan are detailed in an adjustable rate mortgage note (the "Note"), which is secured by a deed of trust on Plaintiffs' property. (Id. ¶ 43; RJN Exs. E, F.) Plaintiffs further allege that contrary to Summers' representations, she sold them "a ...