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Espinoza v. Recontrust Co.

July 13, 2010

OSCAR ESPINOZA AND MARIBEL GUARDADO, PLAINTIFFS,
v.
RECONTRUST COMPANY, N.A.; COUNTRYWIDE HOME LOANS INC., A CALIFORNIA CORPORATION; DITECH HOME FINANCING; GREENLIGHT FINANCIAL SERVICES, A CALIFORNIA CORPORATION; GMAC MORTGAGE, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY; AND DOES 1-20, DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER GRANTING MOTION TO DISMISS [Doc. No. 33]

Currently before the Court is Defendants Ditech Home Financing ("Ditech") and GMAC Mortgage, LLC's ("GMAC") Motion to Dismiss Second Amended Complaint. [Doc. No. 29]. Plaintiffs filed an opposition and Defendants replied. Having considered the partes' arguments, and for the reasons set forth below, the Court GRANTS the motion to dismiss.

BACKGROUND

Plaintiffs Oscar Espinoza and Maribel Guardado are owners of certain real property commonly known as 1427 RIVERVIEW AVE., EL CENTRO, CA 92243 ("Property"). On or around February 28, 2006, Plaintiffs purchased the Property with the financing obtained from Defendants. Plaintiffs borrowed $318,200 for the first mortgage and $79,500 for the concurrent second mortgage from Defendant Greenlight Financial Services ("Greenlight").*fn1 (Def. RJN, Exs. 1, 2.) Plaintiffs allege Defendant Countrywide Home Loans ("Countrywide") is the current servicer of the first loan and Defendant Ditech is the current servicer of the second loan. (SAC ¶ 8.)

Plaintiffs subsequently had difficulties making payments on the mortgages, and on July 24, 2009, received a Notice of Trustee's Sale from Defendant Recontrust Company, setting a trustee's sale of the Property for August 14, 2009. On August 5, 2009, Plaintiffs commenced the present action, alleging eighteen causes of action against Defendants. [Doc. No. 1]. Defendants Ditech and GMAC (together, "Moving Defendants") then filed a motion to dismiss pursuant to Rule 12(b)(6). [Doc. No. 5]. However, before the Court could rule on the motion, Plaintiffs filed their First Amended Complaint ("FAC"), alleging fifteen causes of action. [Doc. No. 9]. In light of the FAC, the Court denied as moot the Motion to Dismiss. [Doc. No. 11]. Moving Defendants immediately filed another motion to dismiss, and Plaintiffs filed a motion for leave to file a Second Amended Complaint ("SAC"). [Doc. Nos. 12, 18]. On April 19, 2010, the Court denied as moot the motion to dismiss and granted in part the motion for leave to file SAC. [Doc. No. 27].

Plaintiffs filed their SAC on May 7, 2010, alleging six causes of action: (1) intentional misrepresentation; (2) fraudulent concealment; (3) accounting and violation of Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605(e) and 24 C.F.R. § 3500; (4) quiet title; (5) violation of the Trust in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq.; and (6) violation of RESPA, 12 U.S.C. § 2607. [Doc. No. 28]. The present motion to dismiss followed.

LEGAL STANDARD

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the pleadings. A complaint survives a motion to dismiss if it contains "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S.544, 570 (2007). The court may dismiss a complaint as a matter of law for: (1) "lack of cognizable legal theory," or (2) "insufficient facts under a cognizable legal claim." SmileCare Dental Group v. Delta Dental Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). The court only reviews the contents of the complaint, accepting all factual allegations as true, and drawing all reasonable inferences in favor of the nonmoving party. al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009) (citation omitted).

Despite the deference, the court need not accept "legal conclusions" as true. Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1949-50 (2009). It is also improper for the court to assume "the [plaintiff] can prove facts that [he or she] has not alleged." Assoc. Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). On the other hand, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 129 S.Ct. at 1950.

DISCUSSION

I. Judicial Notice

Moving Defendants ask the Court to take judicial notice of the following documents pursuant to the Federal Rule of Evidence 201: (1) the First Deed of Trust, executed on February 24, 2006, and recorded on February 28, 2006; (2) the Second Deed of Trust, executed on February 24, 2006, and recorded on February 28, 2006; (3) this Court's April 19, 2010 Order Granting in Part Motion for Leave to File Second Amended Complaint and Denying as Moot Motion to Dismiss; and (4) the Grant Deed, executed on November 30, 2005, and recorded on February 26, 2006. (See Def. RJN, Exs. 1, 2, 3, 4.) The Court will take judicial notice of Exhibits 1, 2, and 4 because those exhibits are matters of public record whose accuracy cannot reasonably be questioned. See FED. R. EVID. 201(a); Lee v. City of Los Angeles, 250 F.3d 668, 689-90 (9th Cir. 2001). On the other hand, the Court declines to take judicial notice of the Court's order (Exhibit 3) as it is unnecessary to do so.

II. Defendant GMAC

In the SAC, Plaintiffs allege Defendant GMAC was the original lender of the second loan. (See SAC ΒΆ 7.) However, in their opposition to the present motion to dismiss, Plaintiffs finally admit that "Defendant GMAC was not the lender on the second mortgage and was mistakenly identified as such by the financial audit." (Pl. Opp., at 2.) In their opposition, Plaintiffs also indicate they will be filing a Rule 41(a) motion to dismiss Defendant GMAC from the current action. However, to date, no such motion has been filed. ...


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