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Lewis v. Diamond Essentials

August 5, 2010

MARC C. LEWIS, PLAINTIFF,
v.
DIAMOND ESSENTIALS, INC., ET. AL., DEFENDANTS.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER: GRANTING DEFENDANTS' MOTIONS TO DISMISS; DENYING DEFENDANTS' MOTIONS TO STRIKE (Doc. Nos. 6, 9, 7, 12.)

Presently before the Court are two motions to dismiss (Doc. Nos. 6, 9) and two motions to strike (Doc. Nos. 7, 12). For the reasons stated below, the Court GRANTS both motions to dismiss and DENIES both motions to strike.

BACKGROUND

Plaintiff's original complaint, filed on February 8, 2008 in the San Diego Superior Court, named as Defendants Emerald Mortgage, Johann Balidido, Teresa Stravers, and Does 1 through 25. (Doc. No. 1-2, Exh. B.) The original complaint asserted three claims: 1) Fraud; 2) General Negligence; and 3) Intentional Tort. (Id.) On July 17, 2008, Plaintiff filed a first amended complaint ("FAC") naming Emerald Mortgage, Johann Balidido, Teresa Stravers, and Does 1 through 10. (Id.) The FAC replaced Plaintiff's original claims with three new claims for: 1) Fraud/Deceit in the Inducement; 2) Negligent Misrepresentation; and 3) Indebitatus Assumpsit. (Id.) Plaintiff filed a second amended complaint ("SAC") on October 23, 2009, adding Defendants Diamond Essentials, Inc.; Kiley, Kruse, Silverthorn & Mercado, Inc.; Denis Kiely; Patrick Eugene Kruse; Jason Edward Silverthorn; Christopher Ian Mercado; Junius Kyung-Jin Lim; Deutche Bank; MortgageIT, Inc.; and Does 1 through 100. (Doc. No. 1-3, Exh. B.) The SAC asserts claims for: 1) Breach of Contract; 2) Breach of the Implied Covenant of Good Faith and Fair Dealing; 3) Intentional Misrepresentation; 4) Fraud; 5) Breach of Fiduciary Duty; 6) Constructive Fraud; 7) Negligent Misrepresentation; 8) Negligence; 9) Unjust Enrichment; 10) Violations of the Truth in Lending Act, 15 U.S.C. 1601 et seq. ("TILA"), 11) Violations of the Real Estate and Settlement Procedures Act, 12 U.S.C 2601 ("RESPA"); and 12) Violations of Business & Professions Code Section 17200. (Id.) Defendants Deutche Bank and MortgageIT, first named in the SAC, are the only defendants named in Plaintiff's causes of action for violations of TILA and RESPA. (Id.) All other claims are asserted against all Defendants. (Id.)

On January 15, 2010, Defendant MortgageIT removed the action to the Southern District of California based on federal question jurisdiction.*fn1 (Doc. No. 1.) On January 22, 2010, Defendants Deutche Bank and MortgageIT filed a motion to dismiss and a motion to strike. (Doc. Nos. 6, 7.) The remaining Defendants, on February 2, 2010, filed a motion to dismiss and a motion to strike in addition to notices joining the motions to dismiss and strike filed by Defendants Deutche Bank and MortgageIT.*fn2 (Doc. Nos. 9, 10, 12, 13.) Plaintiff failed to respond to the motions filed by Defendants Deutche Bank and MortgageIT, but did respond to the motions filed by the remaining Defendants.*fn3 (Doc. Nos. 14, 15.)

LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the defense that the complaint "fail[s] to state a claim upon which relief can be granted," generally referred to as a motion to dismiss. The Court evaluates whether a complaint states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil Procedure 8(a), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief." Although Rule 8 "does not require 'detailed factual allegations,' . . . it [does] demand[] more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, - US - , 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). "Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 557).

"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.'" Id. (quoting Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible when the facts pled "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 556). That is not to say that the claim must be probable, but there must be "more than a sheer possibility that a defendant has acted unlawfully." Id. Facts "'merely consistent with' a defendant's liability" fall short of a plausible entitlement to relief. Id. (quoting Twombly, 550 U.S. at 557). Further, the Court need not accept as true "legal conclusions" contained in the complaint. Id. This review requires context-specific analysis involving the Court's "judicial experience and common sense." Id. at 1950 (citation omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not 'show[n]'-'that the pleader is entitled to relief.'" Id.

DISCUSSION

I. Defendants Deutche Bank and MortgageIT's Motion to Dismiss and Motion to Strike

The Court finds that Plaintiff's RESPA and TILA claims are both barred by their respective statutes of limitations and thus GRANTS dismissal of both claims.

A. Plaintiff's TILA Claim

TILA applies a one-year statute of limitations to damages claims. 15 U.S.C. § 1640(e). The limitations period begins to run from the date the loan transaction is consummated. King v. California, 784 F.2d 910, 915 (9th Cir. 1986). In certain circumstances, however, equitable tolling may be available. Id. Specifically, the limitations period may be suspended "until the borrower discovers or had reasonable opportunity to discover the fraud or non-disclosures that form the basis of the TILA action." Id. This should only be applied, however, "if the general rule would be unjust or frustrate the purpose of the Act." Id. Generally, a litigant bears the burden of establishing that he is entitled to equitable tolling. Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005); Walker v. Equity 1 Lenders Group, 2009 U.S. Dist. LEXIS 40991, at *16. Simply asserting failures to disclose under TILA is not sufficient to justify equitable tolling, as it would render the TILA statute of limitations meaningless. Hubbard v. Fidelity Fed. Bank, 824 F. Supp. 909, 920 (C.D. Cal. 1993); see also Evans v. Rudy-Luther Toyota, Inc., 39 F. Supp. 2d 1177, 1184 (D. Minn. 1999) ("To hold that the Defendant's failure to make the disclosures required by TILA was, in and of itself, an act of fraudulent concealment, would effectively nullify the one-year limitations period that was enacted by Congress") (citations omitted).

Relation back of an amendment with regard to changing the naming of parties is governed by Federal Rule of Civil Procedure 15(c). Rule 15(c) requires that the party receive notice of the complaint "within the period provided by Rule 4(m) for serving the summons and complaint . . . [and that the party] will not be prejudiced in defending on the merits; and (ii)knew or should have known that the action would have ...


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