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Mendez v. Oakmont Mortgage Co.


November 22, 2010


The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge


[Docket No. 3]

This case comes before the Court on Defendants Deutsche Bank National Trust Company and Mortgage Electronic Registration Systems, Inc.'s motion to dismiss Plaintiffs' Complaint. Plaintiffs filed an opposition to the motion, and Defendants filed a reply. For the reasons discussed below, the Court grants in part and denies in part Defendants' motion.


Plaintiffs Martha Mendez and Fernando Mendez, proceeding pro se, are the former owners of real property located at 3520 - 3522 Nile Street, San Diego, California 92104. (Compl. ¶ 7.) Plaintiffs purchased the property on June 7, 2004, with a loan in the amount of $640,000. (Id. ¶¶ 20-21.) Plaintiffs allege they were not provided copies of certain documents at loan closing, nor did anyone explain the terms of the loan to them. (Id. ¶¶ 20-27.)

On November 13, 2009, Plaintiffs' lender filed a Notice of Default and Election to Sell Under Deed of Trust on Plaintiffs' property. (Req. for Judicial Notice in Supp. of Mot., Ex. 2.)

On April 14, 2010, Plaintiffs' lender filed a Notice of Trustee's Sale of Plaintiffs' property, scheduling a sale for May 6, 2010. (Req. for Judicial Notice in Supp. of Mot., Ex. 5.) Defendant Deutsche Bank National Trust purchased the property at the Trustee's Sale, after which the Deed of Trust was transferred to Deutsche Bank on May 14, 2010. (Req. for Judicial Notice in Supp. of Mot., Ex. 6.)

On August 6, 2010, Plaintiffs filed the present case against Defendants Oakmont Mortgage Company, Inc., Mortgage Electronic Registration Systems, Inc. ("MERS") and Deutsche Bank in San Diego Superior Court. The Complaint alleges claims for declaratory relief, breach of contract, misrepresentation/fraud, quiet title and unfair business practices. On September 21, 2010, Defendants Deutsche Bank and MERS removed Plaintiffs' case to this Court. The present motion followed.


Defendants move to dismiss the Complaint in its entirety. They argue each of Plaintiffs' claims fails to state a claim for relief. Plaintiffs dispute Defendants' arguments and oppose dismissal of their claims.

A. Standard of Review

In two recent opinions, the Supreme Court established a more stringent standard of review for 12(b)(6) motions. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss under this new standard, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556).

"Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)). In Iqbal, the Court began this task "by identifying the allegations in the complaint that are not entitled to the assumption of truth." Id. at 1951. It then considered "the factual allegations in respondent's complaint to determine if they plausibly suggest an entitlement to relief." Id. at 1951.

B. Declaratory Relief

The first claim at issue in this motion is Plaintiffs' claim for declaratory relief. Defendants assert this claim is predicated on violations of the Truth in Lending Act ("TILA"), the Home Owners Equity Protection Act ("HOEPA") and the Federal Trade Commission Act ("FTCA"). Defendants argue Plaintiffs have failed to properly plead claims under these statutes, therefore the declaratory relief claim should be dismissed. However, it is unclear whether this claim is based on any of these statutes. Although Plaintiffs identify the declaratory relief they are seeking, they fail to identify the legal basis for that relief. Accordingly, the Court grants the motion to dismiss this claim.

C. Breach of Contract

The second claim alleged in this case is for breach of contract. To state a claim for breach of contract, Plaintiffs must plead the existence "of a contract, plaintiff's performance or excuse for failure to perform, defendant's breach and damage to plaintiff resulting therefrom." Spinks v. Equity Residential Briarwood Apartments, 171 Cal. App. 4th 1004, 1031 (2009) (quoting McKell v. Washington Mutual, Inc., 142 Cal. App. 4th 1457, 1489 (2006)). Defendants argue Plaintiffs here have failed to identify the contract at issue, and Plaintiffs have failed to explain how each Defendant breached the contract. The Court agrees, and thus grants Defendants' motion to dismiss this claim.

D. Misrepresentation/Fraud Claim

Plaintiffs' third claim is for misrepresentation and fraud. Defendants argue this claim should be dismissed because Plaintiffs have failed to satisfy Federal Rule of Civil Procedure 9(b).

A fraud-based pleading satisfies Rule 9(b) if it identifies "the who, what, when, where, and how" of the misconduct charged. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). The allegations in the Complaint do not meet this standard. Indeed, Plaintiffs fail to identify any individual in Defendants employ, what that individual said or did to Plaintiffs, or when or where that conduct occurred. Plaintiffs allege, in general terms, that Defendants "knowingly and intentionally concealed material information from Plaintiffs[,]" (Compl. ¶ 54), but these allegations do not satisfy Rule 9(b). Absent compliance with Rule 9(b), the Court grants the motion to dismiss this claim.

E. Quiet Title

Plaintiffs' next claim is for quiet title. Defendants argue Plaintiffs have failed to set forth facts supporting the elements of a quiet title claim, and more importantly, Plaintiffs have failed to offer to tender their unpaid debt.

However, Defendants have failed to show that Plaintiffs' present inability to tender warrants dismissal of this claim. Although tender is required if the mortgage is still in effect, in this case the foreclosure sale has already occurred, and thus the mortgage has been extinguished. Under these circumstances, it is not clear that Plaintiffs are required to tender. See Fontana Land Co. v. Laughlin, 199 Cal. 625, 639 (1926) (citing Faxon v. All Persons, 166 Cal. 707(stating tender requirement did not apply when "the mortgage had become extinguished.") Thus, the Court denies the motion to dismiss this claim.

F. California Business and Professions Code § 17200

The final claim at issue in this case is Plaintiffs' claim that Defendants violated California Business and Professions Code § 17200. Defendants argue this claim is preempted by TILA, Plaintiffs have failed to allege a business "practice," and Plaintiffs' allegations of a violation of the Racketeer Influenced Corrupt Organizations Act ("RICO") are deficient.

1. Preemption

Defendants argue Plaintiffs' 17200 claim is preempted by TILA. However, this claim does not appear to be based on a violation of TILA. Indeed, there is no mention of TILA in the allegations supporting this claim, nor is their an independent claim for TILA violations. Accordingly, this argument does not warrant dismissal of this claim.

2. Unfair, Unlawful or Fraudulent Business Practice

Next, Defendants argue Plaintiff has failed to allege that Defendants engaged in a wrongful "practice." However, Plaintiffs allege Defendants were engaged in a "fraudulent scheme[ ] for improper use of Plaintiff's [sic] identity, negligent and/or intentional misrepresentation of certain mortgage loans pooled together in a securitization scheme to reap profits at the expense of Plaintiffs and other investors in certain trust funds." (Compl. ¶ 1.) Plaintiffs also allege Defendants' "lending industry practices" caused Plaintiffs to suffer damages. (Id. ¶ 4.) Thus, contrary to Defendants' argument, Plaintiffs have alleged Defendants were engaged in a wrongful business "practice." Therefore, this argument does not warrant dismissal of this claim.

3. RICO Violations

Finally, Defendants assert Plaintiffs' allegations of RICO violations are deficient. However, it is unclear whether Plaintiffs are relying on RICO to support their 17200 claim. (See id. ¶ 71.) In light of this uncertainty, the Court declines to address Defendants' arguments at this time. Instead, Plaintiffs should clearly indicate in their First Amended Complaint whether RICO serves as a basis for their 17200 claim, and if so, they should set forth facts supporting that claim.


For these reasons, the Court grants in part and denies in part Defendants' motion to dismiss. Specifically, the Court grants Defendants' motion to dismiss Plaintiff's declaratory relief claim, breach of contract claim and misrepresentation/fraud claim. The Court denies Defendants' motion to dismiss Plaintiffs' claims for quiet title and unfair business practices.

In accordance with Plaintiffs' request, Plaintiffs are granted leave to file a First Amended Complaint that cures the pleading deficiencies set out in this Order. Plaintiffs are cautioned that if their First Amended Complaint does not cure these deficiencies, their claims will be dismissed with prejudice and without leave to amend. The First Amended Complaint shall be filed on or before December 10, 2010.



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