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Linder v. Aurora Loan Servicing

July 26, 2010



This matter comes before the Court on Defendant Homecomings Financial, LLC's, ("Defendant's") Motion to Dismiss Plaintiff Steve Linder's ("Plaintiff's") complaint ("Complaint")for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. #23). Defendant also moves to strike portions of the Complaint. (Doc. #23). Plaintiff opposes the motion.*fn1 (Doc. #30).


In April 2007, Plaintiff obtained a loan in connection with property located at 2632 Westview Drive, Lincoln, California 95648 ("subject property"). The terms of the loan were memorialized in the promissory Note, which was secured by a Deed of Trust on the subject property. Defendant was the lender.

Defendants Union Fidelity Mortgage, Inc. ("Union") and Roger O'Keefe ("O'Keefe") were Plaintiff's brokers for the loan. Plaintiff alleges that Union and O'Keefe explained to Plaintiff that the loan was the best available on the market, and Plaintiff alleges he accurately stated his income on the loan, but Union and O'Keefe overstated his income when completing the application. Prior to signing the application, Plaintiff alleges he corrected his income. Lastly, Plaintiff alleges that "the loan was also fraudulent and in violation of state and federal law for one or more of the following reasons," and then proceeds to list twelve possible violations that may have occurred.

On September 9, 2009, a Notice of Default and Election to Sell was recorded on the subject property. On December 10, 2009, a Notice of Trustee's Sale of the subject property was recorded.

Plaintiff alleges that a Qualified Written Request ("QWR") will be mailed to defendants pursuant to the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601-2617, demanding rescission of the loan.

Plaintiff filed his Complaint on November 20, 2009 in Placer County Superior Court, alleging ten causes of action, including federal and state claims. Defendant Aurora Loan Services, LLC, removed the case to this Court on December 17, 2009 with Defendant's consent and joinder in the removal. The Court issued an order on April 14, 2010, granting a motion to dismiss all claims against defendant Aurora Loan Services.


A. Legal Standard

A party may move to dismiss an action for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). In considering a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1975), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). "Notwithstanding this deference, it is improper for a court to assume the plaintiff can prove fact which he or she has not alleged." Ozuna v. Home Capital Funding, 2009 WL 2496804, at *1 (S.D. Cal. Aug. 13, 2009).

Assertions that are mere "legal conclusions," however, are not entitled to the assumption of truth. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009), citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To survive a motion to dismiss, a plaintiff needs to plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. Dismissal is appropriate where the plaintiff fails to state a claim supportable by a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

Generally, the court may not consider material beyond the pleadings in ruling on a motion to dismiss for failure to state a claim. Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. Cal. Mar. 30, 2009) (internal citations omitted). There are two exceptions: when material is attached to the complaint or relied on by the complaint, or when the court takes judicial notice of matters of public record, provided the facts are not subject to reasonable dispute. Id. Here, Plaintiff attached to the Complaint an unsigned copy of a loan application and a "mortgage compliance analysis report" that appears to be based on a loan application. The Court will consider these documents, as they were attached to the Complaint.

Upon granting a motion to dismiss for failure to state a claim, the court has discretion to allow leave to amend the complaint pursuant to Federal Rule of Civil Procedure 15(a). "Dismissal with prejudice and without leave to amend is not appropriate unless it is clear... that the complaint could not be saved by amendment." Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

B. Federal Claims

1. Violation of Truth in Lending Act, First Cause of Action

Plaintiff alleges that Defendant violated the Truth in Lending Act, ("TILA"), 15 U.S.C. §1601 et seq., and seeks damages and rescission. Defendant's alleged violations include failing to provide required disclosure statements, failing to make required disclosure clearly and conspicuously in writing, failing to timely deliver to Plaintiff required notices, and failing to disclose all finance charge details. Defendant contends that the action for damages is barred by the statute of limitations.

An action for damages under TILA must be brought within one year of the violation. 8 U.S.C. §1640(e). A TILA violation occurs on "the date of consummation of the transaction," King v. California, 784 F.2d 910, 915 (9th Cir. 1986), and "consummation" means "the time that a consumer becomes contractually obligated on a credit transaction." 12 C.F.R. ยง226(a)(13). Accordingly, Defendant argues that the claim for damages is time barred. The doctrine of equitable tolling, however, may "suspend the limitations period until the borrower ...

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