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Ibarra v. Trimark Funding

August 6, 2010


The opinion of the court was delivered by: Hon. Thomas J. Whelan United States District Judge


Pending before the Court is Defendant Chase Home Finance LLC's ("Chase") motion to dismiss. Plaintiffs Manual Ibarra and Margarita Ibarra oppose.

The Court decides the matter on the papers submitted and without oral argument. See Civ.L.R. 7.1(d.1). For the reasons stated herein, the Court GRANTS Chase's Request for Judicial Notice ("RJN") [Doc. 7-2], and GRANTS the motion to dismiss [Doc. 7].


The following allegations are taken from the First Amended Complaint ("FAC"). This lawsuit arises from Plaintiffs' refinance of their primary residence, located at 1013 Desert View Street, Calexico, California 92243 (the "Property"). (FAC. [Doc. 6], ¶ 5.) The Property was refinanced with two loans. The first was financed by Defendant Trimark Funding, Inc., and serviced by Defendant Bank of America Home Loans Servicing ("BAC"). (Id., ¶¶ 5, 6.) The second loan was financed by Washington Mutual Bank, F.A. ("WaMu") (RJN, Ex. 2), and serviced by Defendant Chase (FAC, ¶ 6).

Plaintiffs allege that during the loan application process, Defendants Trimark and Chase overstated Plaintiffs' income and understated their ultimate interest rate in order to qualify Plaintiffs for the loans. (FAC, ¶¶ 7, 8.) As a result, Plaintiffs' debt-to-income ratio ended up being 94.2%. (Id., ¶ 8.) Plaintiffs also allege other improprieties with the loans. Specifically, Plaintiffs allege that they "did not receive two copies of the Notice of Right to Cancel or any initial Good Faith Estimate or TIL disclosures for either of the loans." (FAC, ¶¶ 11--12.)

Eventually, Plaintiffs began having difficulty paying their mortgage, and were sent a Notice of Default. (FAC, ¶ 13.) On January 7, 2010, Plaintiffs filed this lawsuit. The FAC contains eight state-based causes of action, and three federal claims.

On April 19, 2010, Defendants filed a motion to dismiss the original complaint. In response, on May 13, 2010, Plaintiffs filed the FAC, thereby mooting the motion to dismiss. On June 1, 2010, Defendants filed the current motion to dismiss the FAC.


The court must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See North Star Int'l v. Arizona Corp. Comm'n., 720 F.2d 578, 581 (9th Cir. 1983). All material allegations in the complaint, "even if doubtful in fact," are assumed to be true. Id. The court must assume the truth of all factual allegations and must "construe them in light most favorable to the nonmoving party." Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir. 2002); see also Walleri v. Fed. Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir. 1996).

As the Supreme Court recently explained, "[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964 (2007). Instead, the allegations in the complaint "must be enough to raise a right to relief above the speculative level." Id. at 1964-65. A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984).

Generally, courts may not consider material outside the complaint when ruling on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, courts may consider documents specifically identified in the complaint whose authenticity is not questioned by parties. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superceded by statutes on other grounds). Moreover, courts may consider the full text of those documents, even when the complaint quotes only selected portions. Id. Courts may also consider material properly subject to judicial notice, such as matters of public record, without converting the motion into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994) (citing Mack v. South Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986); abrogated on other grounds by Astoria Federal Savings and Loan Ass'n v. Solimino, 501 U.S. 104 (1991)).


A. Judicial Notice of Plaintiffs' Trust Deeds is Appropriate

Chase's motion to dismiss includes a request for judicial notice of Plaintiffs' first and second deeds of trust. (See RJN, Exs. 1, 2.)

Requests for judicial notice are governed by Federal Rule of Evidence 201(b), which provides:

A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.

Courts may take judicial notice of matters of public record on a motion to dismiss. See MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986); Fortaleza v. PNC Financial Services Group, Inc., 642 F.Supp.2d 1012, 1019 (N.D.Cal. 2009) (granting judicial notice of Notice of Trustee's Sale and Notice of Default recorded in county's official records). Accordingly, the Court will grant Chase's request for judicial notice.

B. Plaintiffs Failed to State a Claim for Intentional Misrepresentation

Plaintiffs' first claim is for intentional misrepresentation. Chase argues the claim should be dismissed because, among other reasons, it is not pled with sufficient particularity, and Chase was not involved in the origination of the loan. The Court agrees.

The following elements are required to state a claim for intentional misrepresentation under California law: (1) a false representation; (2) knowledge of the falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) damages. Philipson & Simon v. Gulsvig, 154 Cal.App.4th 347, 363 (2007). Moreover, Federal Rule of Civil Procedure 9(b) requires fraud-based claims to be pled with particularity. See Neilson v. Union Bank of California, N.A., 290 F.Supp.2d 1101, 1141 (C.D.Cal. 2003) ("claim for fraud and negligent misrepresentation must meet Rule 9(b)'s particularity requirements."). In In re GlenFed, Inc. Securities Litigation, 42 F.3d 1541 (9th Cir. 1994) (superseded by statute on other grounds), the Ninth Circuit explained that this rule requires, more than simply a reiteration of requirements stated elsewhere. Rule 9(b) requires particularized allegations of the circumstances constituting fraud.

The time, place, and content of an alleged misrepresentation may identify the statement or the omission complained of, but these circumstances do not 'constitute' fraud. The statement in question must be false to be fraudulent. Accordingly, our cases have ...

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