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Ausano v. BAC Home Loans Servicing

August 31, 2010


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


There are two pending motions to dismiss the Second Amended Complaint ("SAC"). The first was filed by Defendants BAC Home Loans Servicing, LP and Countrywide Home Loans, Inc. [Doc. 26], and the second by Defendant PNC Bank, National Association*fn1 [Doc. 27]. Plaintiffs has not filed oppositions, and the Court GRANTS both motions.


Plaintiffs are suing Defendants over two loans secured by deeds of trust on their home at 1402 Granite Springs Drive, Chula Vista, CA 91915. They allege a variety of claims related to the origination of the mortgages and, in addition to wanting to prevent foreclosure, they seek damages and rescission of the loans.

Plaintiffs refinanced their home on February 7, 2005, obtaining financing from Defendant Countrywide on a first loan, and a home-equity line of credit from Defendant National City on a second loan. The two loans are secured by their home.*fn3 Defendant BAC Home Loan is the current servicer of the first loan, and Defendant PNC Bank is the servicer on the second loan. Diego Palomera, an agent of "Countrywide and/or National City," negotiated the loan and filled out the loan application for them. (SAC ¶¶ 17, 22.) Palomera used inflated income figures in order to get them a loan they could not afford. And they could not verify what Palomera wrote because Plaintiffs speak only Spanish and do not speak, read, or write English. They were therefore unaware of the false information Palomera wrote on the application. Plaintiffs also did not receive required disclosures under federal law when they executed the loans.

Plaintiffs filed their original complaint in October 2009 and have twice amended it. Defendants have moved to dismiss the SAC on several grounds, and the Court addresses each below.


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.


1. Intentional Misrepresentation

Plaintiffs' first claim is for intentional misrepresentation. The elements of an intentional-misrepresentation claim are (1) a misrepresentation; (2) knowledge of its falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. Anderson v. Deloitte & Touche, 56 Cal. App. 4th 1468, 1474 (1997). In addition to stating facts for each element, a claim for negligent misrepresentation must be alleged with particularity under Rule 9(b). Neilson v. Union Bank of California, 290 F. Supp. 2d 1101, 1141 (C.D. Cal. 2003) (citing Glen Holly Entertainment, Inc. v. Tektronix, Inc., 100 F. Supp. 2d 1086, 1093 (C.D. Cal. 1999). That means a complaint "must adequately specify the statements it claims were false or misleading, give particulars as to the respect in which plaintiff contends the statements were fraudulent, state when and where the statements were made, and identify those responsible for the statements." In re GlenFed, Inc. Securities Litigation, 42 F.3d 1541, 1548 (9th Cir. 1994) (en banc). And a complaint cannot lump defendants together; plaintiffs must "differentiate their allegations when suing more than one defendant . . . and inform each defendant separately of the allegations surrounding his alleged participation in the fraud." Swartz v. KPMG LLP, 476 F.3d 756, 764--65 (9th Cir. 2007).

Plaintiffs fail to plead their intentional-misrepresentation claim with particularity. Their allegations are too general. In paragraph 55 of the SAC, they list seven supposed misrepresentations, but do not say who made them or when. Instead, they lump National City and Countrywide together, and allege that the Defendants made the misrepresentations "[d]uring the loan transaction and to date," an indefinite period of time. (SAC ¶ 55.) This simply is not enough. And although Plaintiffs allege with some specificity that Diego Palomera filled out the loan application for them, they allege that he was the agent of "Countrywide and/or National City" (emphasis added). (SAC ¶ 17.) So it is unclear for whom Mr. Palomera actually worked. Plaintiffs have therefore failed to allege their intentional-misrepresentation claim with particularity.

Plaintiffs' intentional-misrepresentation claim is also barred by the statute of limitations. The statute of limitations for this claim is three years, Cal. Civ. Code § 338(d), starting from when a plaintiff discovered or should have discovered the fraud, see Goldrich v. Natural Y Surgical Specialties, Inc., 25 Cal. App. 4th 772, 779 (1994). Plaintiffs filed their action in October 2009, over three years after they allegedly executed the ...

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