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Barboza v. Deutsche Bank Securities

June 29, 2010

JOSE LUIS BARBOZA, PLAINTIFF,
v.
DEUTSCHE BANK SECURITIES, INC. & LITTON LOAN SERVICING, LP. DEUTSCHE BANK SECURITIES, INC., LITTON LOAN SERVICING, LP. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

MEMORANDUM DECISION GRANTING

(Docs. 9 & 15).

I. INTRODUCTION

On February 16, 2010, Plaintiff filed a complaint in the Superior Court of the State of California, County of Kern, alleging five causes of action against Defendants Deutsche Bank Securities Inc. ("Deutsche") and Litton Loan Servicing, LP, ("Litton") regarding a mortgage loan for property located in Wasco, California. On March 31, 2010, Deutsche removed the case to federal court pursuant to 28 U.S.C. §§ 1332, 1441 based on diversity jurisdiction. (Doc. 1.)

Plaintiff alleges (1) fraud; (2) unconscionable contract; (3) breach of covenant of good faith and fair dealing; (4) violation of business and professions code § 17200 and (5) reformation. (Doc. 1-2, Compl.)

Before the Court for decision are motions to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) brought by Deutsche and Litton (Docs. 9 & 15), and Deutsche's Motion to Strike pursuant to Rule 12(f) (Doc. 10). Plaintiff filed an opposition. (Doc. 21.) Defendants filed a joint reply. (Doc. 22.) The matter came on for hearing in Courtroom 3 (OWW) on June 21, 2010, at 10:00 a.m.

II. LEGAL STANDARDS

A. 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 (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).

B. Rule 9(b) Heightened Pleading

All claims for fraud must be pled with sufficient particularity. Fed. R. Civ. P. 9(b). "To comply with Rule 9(b), allegations of fraud must be specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud ...." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (internal quotation marks omitted). Allegations of fraud must include the "time, place, and specific content of the false representation as well as the identities of the parties to the misrepresentations." Id. (internal quotation marks omitted). "Averments of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged." Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (internal quotation marks omitted). A plaintiff alleging fraud "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 statement, and why it is false." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (emphasis and internal quotation marks omitted).

C. Motion to Strike

Rule 12(f) provides that the Court "may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Motions to strike are disfavored and infrequently granted. Neveu v. City of Fresno, 392 F. Supp. 2d 1159, 1170 (E.D. Cal. 2005). 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. Id. The function of a Rule 12(f) motion to strike is to avoid the expenditure of time and money that might arise from litigating spurious issues by dispensing with those issues prior to trial. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds, 510 U.S. 517 (1994). A motion to strike may be used to strike any part of the prayer for relief when the recovery sought is unavailable as a matter of law. See Bureerong v. Uvawas, 922 F. Supp. 1450, 1479 n. 34 (C.D. Cal. 1996).

III. BACKGROUND

On October 25, 2006, Plaintiff "obtained a mortgage loan for the property located at 1001 Pistachio Street, Wasco, CA 93280." (Compl. ¶ 3.) Plaintiff promised to repay $168,000 to Fremont Investment & Loan ("Fremont"). (Doc 9 [Def.'s Mot. To Dismiss.]) On March 9, 2009, Plaintiff failed to make payments and the beneficiary "iniate[d] foreclosure of the property." (Id.) On March 10, 2009, a notice of default was recorded. (Id.) On March 9, 2009, Quality Loan Service Corporation was substituted as trustee. (Id.) On October 22, 2009 the trustee completed foreclosure by power of sale under the power of sale contained in the dead and trust. (Id.)

Plaintiff primarily speaks Spanish and alleges that he was not provided with a Spanish translation of the loan terms. (Compl. ¶ 5.) Plaintiff recorded a notice of lis pendes on February 16, 2010. (Doc. 9.)

IV. ANALYSIS

A. Motion to Dismiss for Failure to ...


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