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Simila v. American Sterling Bank

October 12, 2010

ERIC SIMILA AND DIANTHA SIMILA, PLAINTIFFS,
v.
AMERICAN STERLING BANK, ET AL., DEFENDANTS.



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

ORDER: (1) GRANTING DEFENDANT COUNTRYWIDE HOME LOANS' MOTION TO DISMISS; AND (2) GRANTING DEFENDANT NATIONAL CITY MORTGAGE'S MOTION TO DISMISS

(Doc. Nos. 40 & 41.)

Presently before the Court is Defendant National City Mortgage's ("National City") motion to dismiss and Defendant Countrywide Home Loans' ("Countrywide") motion to dismiss Plaintiffs' second amended complaint ("SAC"). (Doc. Nos. 38, 40, & 41.) Also before the Court are Plaintiffs' oppositions to both motions to dismiss (Doc. Nos. 43 & 44) and National City and Countrywide's replies. (Doc. Nos. 45 & 47.) For the reasons stated below, the Court GRANTS National City's motion to dismiss and GRANTS Countrywide's motion to dismiss.

BACKGROUND

Plaintiffs allege that they are the owners of the subject property located at 12880 Stone Canyon Road, Poway, CA 92064. (SAC ¶ 1.) On or about December 1, 2006, Plaintiffs contend that they received-at the request of InterBanc Mortgage ("InterBanc"), American Sterling Bank ("ASB"), and others-a loan from ASB and a loan from American Sterling Bank 2nd Mortgage Division ("ASB-2"). (Id. ¶ 17.) These two loans are collectively referred to as the "loans." (Id. ¶ 9.) In this loan transaction, Plaintiffs allege that InterBanc is the broker, ASB and ASB-2 are the originating lenders, and National City and Countrywide are the servicers. (Id. ¶¶ 2, 3, 5, 6, & 7.)

Plaintiffs initiated this action on April 16, 2009, by filing a complaint in this Court. (Doc. No.1.) On June 12, 2009, National City moved to dismiss the complaint for failure to state a cause of action. (Doc. No. 4.) On August 7, 2009, Countrywide filed a separate motion to dismiss the complaint. (Doc. No. 7.) Before the Court ruled on these motions, Plaintiffs filed a First Amended Complaint ("FAC") on September 8, 2009.*fn1 (Doc. No. 13.) Responding to the FAC, Countrywide and National City again filed separate motions to dismiss. (Doc. Nos. 16 & 17.) And the Court ultimately granted both motions. Plaintiffs then filed a Second Amended Complaint ("SAC") on June 7, 2010. (Doc. No. 38.)

The SAC alleges eight causes of action arising from the defendants' alleged wrongful acts before the initiation of the Plaintiffs' loans as well as during the servicing period. (See SAC ¶ 18.) The claims alleged are (1) Violation of the Real Estate Settlement Protection Act ("RESPA"), 12 U.S.C. § 2605 et seq.; (2) Violation of Truth-in-Lending Act ("TILA"), 15 U.S.C. § 1601 et seq.; (3) Violation of California's Business and Professions Code § 17200 et seq.; (4) Negligent Misrepresentation; (5) Fraud; (6) Rescission; (7) Quasi Contract; and (8) Determination of Validity of Lien.

National City and Countrywide filed separate motions to dismiss the SAC in June 2010. (Doc. Nos. 40 & 41.) Plaintiffs filed separate oppositions on July 29, 2010. (Doc. Nos. 43 & 44.) National City and Countrywide filed their replies on August 4 and 5, 2010. (Doc. Nos. 45 & 47.) A hearing on the motions to dismiss the SAC was thereafter vacated, and the matter was taken under submission without oral argument.

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.

Where a motion to dismiss is granted, "leave to amend should be granted 'unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.'" DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). In other words, where leave to amend would be futile, the Court may deny leave to amend. See Desoto, 957 F.2d at 658; Schreiber, 806 F.2d at 1401.

DISCUSSION

I. Real Estate Settlement Procedures Act: 12 U.S.C. § 2605

Plaintiffs' first cause of action is for violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2605 et seq. RESPA requires lenders to comply with specific notice requirements in the context of mortgage loans. Plaintiffs contend that Defendants Countrywide and National City violated RESPA by failing to adequately respond to Plaintiffs' Qualified Written Requests ("QWR") for information regarding the loans. (SAC ¶¶ 55--56.)

When a loan servicer receives a QWR, the servicer is obligated to respond with an acknowledgment letter within twenty business days and respond to the QWR within sixty business days. 12 U.S.C. §§ 2605(e)(1)--(3). The servicer's duties when responding are limited. "Section 2605 only requires servicers to respond to a proper QWR by correcting the account discrepancy, explaining why the account is correct, or if the information is unavailable, by providing contact information for someone who can assist the borrower with her inquiry." Arango v. Recontrust Co., N.A., 2010 WL 2404652 (S.D. Cal. June 14, 2010).

Plaintiff alleges the existence of four QWRs. Two were sent to Countrywide and two were sent to National City. The Court will discuss the QWRs as they pertain to each defendant.

A. QWRs to Countrywide Plaintiffs allege that they sent QWRs to Countrywide on or about November 10, 2008, and on or about January 20, 2009. (SAC ¶ 56.) Plaintiffs allege that Countrywide failed to acknowledge receipt of the QWRs within 20 days and failed to "fully" respond within 60 days. (Id.)

Plaintiffs allegations fail to state a claim upon which relief can be granted. Plaintiffs' indicate that Countrywide failed to "fully" respond, implying that Countrywide did respond. (Id. ¶¶ 56(b) & (j).) And Plaintiffs' fails to allege facts showing that Countrywide's response failed to meet RESPA's requirements. Plaintiffs allegedly requested information instead of notifying Countrywide of an account discrepancy. Even if Countrywide failed to provide the requested information, Plaintiffs fail to allege facts showing that Countrywide failed to provide contact information for someone who could assist Plaintiffs.

Additionally, Plaintiffs fail to allege damages recoverable under RESPA. RESPA allows recovery of both statutory and actual damages. 12 U.S.C. §§ 2605(f)(1)(A)--(B). In order to recover statutory damages, plaintiffs must allege a pattern or practice of noncompliance with RESPA. Plaintiffs allege no facts supporting such damages.

Instead, Plaintiffs make a claim for actual damages, alleging that "as a proximate result of the negligent conduct of the defendants . . . Plaintiffs sustained damages, including monetary loss, medical expenses, emotional distress, loss of employment, loss of credit, loss of opportunities, and other damages." (SAC ¶ 57.) Other than this conclusory statement, however, the SAC fails to provide any allegations as to how the Plaintiff's alleged breach of RESPA duties resulted in actual loss. While instances of emotional distress, time spent away from employment, and negative credit ratings have been interpreted as "actual damages" under § 2605(f)(1)(A), conclusory allegations of such loss are nonetheless insufficient to allege that Plaintiff suffered actual loss. Espinoza v. Reconstruct Co., 2010 WL 2775753, at *4 (S.D. Cal. July 13, 2010). For example, Plaintiffs claim a loss of credit but do not indicate "how these pecuniary losses were sustained." Hawkins v. Homecomings Financial, LLC, 2010 WL 1710274, at * 2 (C.D. Cal. April 26, 2010).

For the reasons stated above, the Court hereby GRANTS Countrywide's motion to dismiss the RESPA claim. Plaintiffs fail to allege facts establishing a RESPA ...


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