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Carter v. GMAC Mortgage

November 23, 2010



Plaintiff Michael C. Carter brought this action against defendants GMAC Mortgage, LLC ("GMAC") and First California Mortgage Corporation ("First California") alleging various federal and state claims arising out of plaintiff's mortgage transaction. GMAC and First California now move to dismiss plaintiff's Second Amended Complaint ("SAC") pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.

I. Factual and Procedural Background

In December of 2005, plaintiff obtained a loan from First California to purchase his residence at 1664 Baroness Way, Roseville, Placer County, California. (SAC ¶¶ 6, 52-53 (Docket No. 31).) On December 12, 2005, a Deed of Trust was recorded in Placer County Recorder's Office. (GMAC's Req. for Judicial Notice Ex. 1 (Docket No. 35).) Kathy Robinson of Financial Company of America, an alleged agent of First California, allegedly misrepresented to plaintiff that the loan had the best interest rate available on the market, the loan had a fixed interest rate, and that the appraisal value of the property was correct. (SAC ¶¶ 51(1), (3), (7)-(8).) Robinson's other alleged misrepresentations include that the loan application correctly stated plaintiff's income, the loan application did not include plaintiff's wife's income because she had terminal cancer, the fee charged for the loan was consistent with fees charged for the best loan available on the market, plaintiff had the ability to repay the loan, plaintiff was given at time of closing all the legally required disclosures, and that "at the time of the signing of all the loan documents it was not necessary for plaintiff to read all the documents since they were in order and did not need to be read but only signed." (Id. ¶¶ 51(2), (4)-(6), (9), (11).)

First California allegedly negligently falsified plaintiff's income, appraisal value of the property, and other information on his loan application. (Id. ¶ 38.) This was done to "induce" plaintiff to enter the loan transaction. (Id. ¶ 40.)

Plaintiff further alleges that plaintiff did not receive the required Notice of Right to Cancel pursuant to the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f, at the time of the loan origination. (SAC ¶ 28.) Plaintiff's signature on the Notice of Right to Cancel in First California's possession is allegedly forged. (Id.)

Plaintiff alleges that GMAC is liable because GMAC "assumed or was assigned" the loan. (Id. ¶¶ 8, 13.) Also, GMAC had an "agreement" with First California to accept loans that included "false information and pre-payment penalties borrowers were not aware of, for the purpose of closing a higher volume of loans for their financial gain." (Id. ¶ 14.)

Plaintiff filed the initial complaint in California Superior Court in Placer County on February 18, 2010. (Docket No. 1.) With GMAC's consent, First California removed the case to this court on March 18, 2010. (Id.) Plaintiff asserts claims for a TILA violation, negligence, fraud, and violations of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200-17210. The court granted defendants' motions to dismiss the initial complaint in its entirety on May 12, 2010. (Docket No. 17.) The court granted First California's motion to dismiss the First Amended Complaint on August 6, 2010. (Docket No. 29.) Both defendants now move to dismiss the SAC pursuant to Federal Rule of Civil Procedure 12(b)(6).

II. Discussion

To survive a motion to dismiss, a plaintiff must plead "only enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," and where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility." Ashcroft v. Iqbal, ---U.S. ----, 129 S.Ct. 1937, 1949 (2009) (internal quotation marks omitted). In deciding whether a plaintiff has stated a claim, the court must assume that the plaintiff's allegations are true and draw all reasonable inferences in the plaintiff's favor. Usher v. City of L.A., 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks omitted).

In general a court may not consider items outside the pleadings upon deciding a motion to dismiss, but may consider items of which it can take judicial notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). A court may take judicial notice of facts "not subject to reasonable dispute" because they are 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." Fed. R. Evid. 201.

GMAC requests the court take notice of plaintiff's Deed of Trust, publically recorded in the Placer County Recorder's Office. The court will take judicial notice of this document, since it is a matter of public record whose accuracy cannot be questioned. See Lee v. City of L.A., 250 F.3d 668, 689 (9th Cir. 2001).

A. TILA Claim

The statute of limitations for a TILA damages claim*fn1 is one year from the occurrence of a violation. 15 U.S.C. § 1640(e). The "limitations period in [s]section 1640(e) runs from the date of consummation of the transaction." King v. State of Cal., 784 F.2d 910, 915 (9th Cir. 1995). Here, the alleged failure to provide plaintiff with the Notice of Right to Cancel occurred in December of 2005 and plaintiff filed the initial complaint in February of 2010. Over one year has run, but plaintiff argues that the statute of limitations should be tolled on his TILA claim. (Docket No. 40 at 2:17-3:25; Docket No. 43 at 2:3-4:12.)

"[T]he doctrine of equitable tolling may, in the appropriate circumstances, suspend the limitations period until the borrower discovers or had reasonable opportunity to discover the fraud or nondisclosures that form the basis of the TILA action." King v. State of Cal., 784 F.2d at 915. The applicability of the equitable tolling doctrine often depends on matters outside the pleadings and thus "is not generally amenable to resolution on a Rule 12(b)(6) motion." Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1206 (9th Cir. 1995). Nonetheless, when a plaintiff fails to allege facts suggesting that he did not have a reasonable opportunity to discover the ...

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