The opinion of the court was delivered by: Hon. Oliver W. Wanger
ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS AND STRIKE
Hearing Date: June 14, 2010
TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
On June 14, 2010 in Courtroom 3 of the above-entitled Court, the Motions to Dismiss and Strike -- pursuant to Federal Rules of Civil procedure 12 (b) (6) and 12 (f) -- the complaint of plaintiffs Samuel S. Zendejas, Jr. & Maria Zendejas by defendants GMAC Mortgage, LLC (named as "wholesale Mortgage Corp.")("GMAC"), ETS Services, LLC (named as "Executive Trustee Services, LLC"), and Federal National Mortgage Association ("FNMA") (collectively "Defendants") came on regularly for hearing. Jonathan D. Dykstra appeared for defendant. Trang Goebel appeared on behalf of plaintiffs. Having considered all of the moving papers supporting and opposing the Motion to Dismiss and the Motion to Strike, as well as the arguments of counsel, and finding good cause therefore, the Court ruled as follows:
This action concerns deeds of trust encumbering the real property located at 2644 East Seeger Avenue, Visalia, California 93292 ("Property"). Plaintiffs admit that on or about March 30, 2007 they borrowed $220,500.00 from GMAC to refinance previous loans on the Property ("Loan"). Complaint, Doc. 1, ¶16. Plaintiffs defaulted on the Loan based on personal hardships. Id. ¶¶9, 18. Plaintiffs allege that they contacted GMAC and requested a loan modification. Id. ¶11. GMAC failed to offer Plaintiffs and "acceptable loan modification" in light of Plaintiffs‟ declining income. Id. ¶11. Plaintiffs further allege they continued to work with GMAC for a loan modification but that GMAC failed to offer Plaintiffs other options. Id. ¶11.
Plaintiffs admit that due to their default, non-judicial foreclosure proceedings were commenced and completed. The real property was sold at a trustee‟s sale on October 23, 2009. Id. ¶¶21-23.
A. Rule 12(f) Motion to Strike
Under Rule 12(f), a court may strike from a pleading "an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). "The function of a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial." Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983). A motion to strike should not be granted unless it is clear that the matter to be stricken could have no possible bearing on the subject matter of the litigation. Neveu v. City of Fresno, 392 F.Supp.2d 1159, 1170 (E.D. Cal. 2005).
B. Rule 12(b)(6) Motion to Dismiss
A motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In deciding whether to grant a motion to dismiss, the court "accept [s] all factual allegations of the complaint as true and draw[s] all reasonable inferences" in the light most favorable to the nonmoving party. Rodriguez v. Panayiotou, 314 F.3d 979, 983 (9th Cir. 2002). 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.‟" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (May 18, 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
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. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that defendant has acted unlawfully. Where 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. (citing Twombly, 550 U.S. 556-57). Dismissal also can be based on the lack of a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
The right to recover punitive damages is governed by California Civil Code section 3294 which states in relevant part that:
(a) In an action. for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.
(c) As used in this section, the following definitions shall apply:
(1) "Malice" means conduct, which is intended by the defendant to cause injury to the plaintiff or despicable conduct, which is carried on by the defendant with a willful and conscious disregard for the rights or safety of others.
(2) "Oppression" means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that persons‟ rights.
(3) "Fraud" means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.
Cal. Civ. Code §3294. Unless a defendant is found guilty of "oppression, fraud, or malice," rising to the level of despicable conduct, punitive damages cannot be recovered by the plaintiff. Gaffney v. Downey Savings & Loan Assn., 200 Cal.App.3d 1154, 1169 (1988). Conclusory allegations of fraud, misrepresentation, bad faith, oppression, malice and the like are insufficient. Lavine v. Jessup, 161 Cal.App.2d 59, 69 (1958).
Plaintiffs‟ prayer for punitive damages is wholly unsupported by any factual allegations. Plaintiffs do not oppose Defendants‟ motion to strike the punitive damages prayer.
The motion to strike the punitive damages ...