The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge
This matter is before the court on America's Servicing Company and Mortgage Electronic Registration's (collectively "defendants") motion to dismiss plaintiffs Daniel Edstrom and Teri Edstrom's (collectively "plaintiffs") first amended complaint ("FAC") pursuant to Federal Rules of Civil Procedure 12(b)(6). Specifically, defendants contend that plaintiffs' claims pursuant to the Truth in Lending Act ("TILA"), Real Estate Settlement Procedures Act ("RESPA"), and Fair Debt Collection Practices Act ("FDCPA") are time barred.*fn1
In opposing the motion, plaintiffs ask that should the court grant defendants' motion to dismiss in any respect, the court give plaintiffs the opportunity to amend their complaint.*fn2
"Valid reasons for denying leave to amend include undue delay, bad faith, prejudice, and futility." Cal. Architectural Building Prods. v. Franciscan Ceramics, 818 F.2d 1466, 1472 (9th Cir. 1988). While leave to amend must be freely given, the court is not required to allow futile amendments. Klamath-Lake Pharm. Ass'n v. Klamath Med. Serv. Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983).*fn3
For the reasons set forth below, defendants' motion to dismiss is GRANTED WITHOUT LEAVE TO AMEND.
On or about September 7, 2005, plaintiffs financed and obtained a loan for $500,000. The terms of the loan were included in the promissory note, secured by a deed of trust on the property, which identified Mortgage Lenders Network USA, Inc. ("MLN") as the lender. (Defs.' Notice of Removal, filed Jan. 13, 2010 [Docket # 1] ["DNR"], Ex. A.) Mortgage Electronic Registration Systems, Inc. ("MERS") was named nominee and beneficiary. (Id. at Ex. B.) Plaintiffs used the loan proceeds to purchase a parcel of real property known as "3690 Brown Court, Cool, California, 95614" (the "Property"). (FAC, filed June 8, 2010 [Docket # 15], ¶ 9.) Eventually, plaintiffs went into default on their loan. American's Servicing Company ("ASC") is the contact agency on the Notice of Default. (DNR at Ex. B.)
Plaintiffs' first cause of action is for statutory violations of RESPA. Plaintiffs allege generally that defendants entered into a fraudulent scheme to extract illegal compensation from plaintiffs through an undisclosed yield spread premium ("YSP"). (FAC at ¶ 14-16.) Further, plaintiffs allege that a YSP equates to a kickback in violation of RESPA. (Id.)
Additionally, plaintiffs claim that they sent defendants a "debt validation" request in December 2007.*fn5 (Proposed SAC, filed Sept. 30, 2010 [Docket # 33], ¶ 49.) Plaintiffs assert this was a qualified written request ("QWR") and that defendants failed to respond in violation of RESPA. (Id. at ¶¶ 49-55.)
Plaintiffs' second cause of action is for statutory violations of TILA.*fn6 Plaintiffs claim that defendants misrepresented plaintiffs' actual lending costs. (Id. at ¶ 71.) Specifically, they claim the YSP was not disclosed in the good faith estimate ("GFE"), and, that although the YSP was included in the closing documents, it was done so in a deceptive manner. (Id. at ¶ 24.) Consequently, plaintiffs allege generally that this "deception" is a violation of TILA. (Id. at ¶¶ 70-72.)
Plaintiffs' final cause of action is for statutory violations of FDCPA. Plaintiffs assert that (1) defendants' debt collection letters did not contain information to advise consumers of their rights to dispute a debt; (2) defendants' debt collection letters created a false sense of urgency and misrepresented the importance, cost, and purpose of the communication; (3) defendants' validation notices included deceptive statements and content; and (4) defendants' imposed and/or collected illegal service charges. (FAC at ¶¶ 73-86.)
Finally, plaintiffs allege that equitable tolling should be invoked because plaintiffs "could not understand any of the documents and signed them based on representations and the trust and confidence . . . [p]laintiffs placed in [d]efendants.'" (Id. ¶ 151.) Consequently, plaintiffs assert they were not provoked to inquire into the alleged violations until December 2007 and the start of the "global real estate calamity." (Proposed SAC ¶ 48.)
On a motion to dismiss, the allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). The court is bound to give the plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). Thus, the plaintiff need not necessarily ...