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Jelsing v. MIT Lending

July 9, 2010

REBEKAH JELSING, ET AL., PLAINTIFF,
v.
MIT LENDING, ET AL., DEFENDANT.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER RE MOTIONS TO DISMISS

Several Defendants have moved to dismiss the Complaint. Wells Fargo Bank, N.A., Mortgage Electronic Registration Systems, Inc. ("MERS"), and Deutsche Bank National Trust Company, as trustee, have filed a motion to dismiss [Doc. 8]. And MIT Lending, Inc. and MortgageIT, Inc. have filed a motion to strike and a motion to dismiss [Docs. 25, 26].

The Court GRANTS Wells Fargo, MERS, and Deutsche Bank's motion to dismiss [Doc. 8], and GRANTS MIT Lending and MortgageIT's motion to dismiss [Doc. 26]. The Court DENIES as moot their motion to strike [Doc. 25].

I. BACKGROUND*fn1

Plaintiffs Rebekah and Joshua Jelsing twice refinanced their property at 407 Swamis Lane, Encinitas, CA 92009. Their first loan, for $570,000.00, was secured by a deed of trust on their property. They executed the loan documents in June 2005. Their second loan, for $140,500.00, was also secured by a deed of trust on their property. They executed the loan documents for the second loan in May 2006.

A notice of default and election to sell under deed of trust was recorded against the property in November 2008. And in February 2009, a notice of trustee's sale was recorded against the property. The Jelsings then transferred legal title to the property by grant deed to Plaintiff KAP CA, LLC in November 2009. The same month, a third-party buyer tendered a short-sale offer to Defendant Wells Fargo, which serviced the first loan. Wells Fargo denied the offer.

Plaintiffs allege eight causes of action related to their two loans. The Court discusses the law and facts related to each claim below.

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 8(a)(2), the plaintiff is required only to set forth a "short and plain statement of the claim showing that the pleader is entitled to relief," and "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). When reviewing a motion to dismiss, the allegations of material fact in plaintiff's complaint are taken as true and construed in the light most favorable to the plaintiff. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). But only factual allegations must be accepted as true-not legal conclusions. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Although detailed factual allegations are not required, the factual allegations "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Furthermore, "only a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 129 S.Ct. at 1949.

In ruling on a motion to dismiss, a court may take judicial notice of matters of public record that are not subject to reasonable dispute. Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).

III. DISCUSSION

1. Real Estate Settlement Procedures Act

As an initial matter, Wells Fargo, MERS, and Deutsche Bank all argue that Plaintiffs' failure to tender the full amount of their outstanding obligation undermines all their claims. The Court disagrees. As explained in a later section of this order, only some of Plaintiffs' claims require a tender; others do not.

Plaintiffs claim against Wells Fargo under the Real Estate Settlement Procedures Act ("RESPA"), for example, does not require a tender to be valid. It does, however, fail for other reasons.

Plaintiffs make a claim under RESPA for failing to respond to a qualified written request ("QWR"), which is a request for information about a loan. See 12 U.S.C. § 2605(e). Plaintiffs allege they sent Wells Fargo a QWR, but it never responded. RESPA requires loan servicers to respond to QWR's. See id. Wells Fargo does not dispute that it failed to respond. Instead, it argues that Plaintiffs have not pled they suffered damages because of Wells Fargo's failure, which is an essential element of their claim. The Court agrees.

"Numerous courts have read Section 2605 as requiring a showing of pecuniary damages in order to state a claim." Molina v. Wash. Mut. Bank, No. 09cv894, 2010 WL 431439, at *7 (S.D. Cal. Jan. 29, 2010) (listing cases). Here, Plaintiffs only allege they "were harmed and were unable to evaluate the Loans or correct their account." This conclusory allegation is not enough and fails to adequately plead damages.

Plaintiffs also seek statutory damages for the alleged RESPA violations. But statutory damages are only available for a "pattern or practice of [RESPA] noncompliance." See 12 U.S.C. ยง 2605(f)(1)(B). Plaintiffs have not alleged a pattern or ...


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