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Lowell Findley, and Joni Findley v. American Home Mortgage Corporation

December 14, 2010

LOWELL FINDLEY, AND JONI FINDLEY,
PLAINTIFFS,
v.
AMERICAN HOME MORTGAGE CORPORATION, DBA AMERICAN BROKERS CONDUIT, AND DBA AMERICAN HOME MORTGAGE SERVICING, INC.; WINDSOR CAPITAL MORTGAGE CORPORATION, CHRIS CARTER, AN INDIVIDUAL; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AND DOES 1-50, DEFENDANTS.



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

MEMORANDUM AND ORDER

This matter is before the court on American Home Mortgage Servicing, Inc. ("AHMSI") and Mortgage Electronic Registration Systems, Inc.'s ("MERS") (collectively "defendants") motion to dismiss plaintiffs Lowell Findley and Joni Findley's*fn1 (collectively "plaintiffs") first amended complaint ("FAC") pursuant to Federal Rules of Civil Procedure 12(b)(6).*fn2

Defendant AHMSI argues that it should be dismissed from the action because it is not the same entity as named defendants American Home Mortgage Corporation or American Brokers Conduit ("ABC"), and furthermore, because it was not in existence at the time plaintiffs' loan originated. AHMSI and MERS also move to dismiss the FAC on a variety of other bases, including, that each of plaintiffs' claims are barred by the relevant statute of limitations, and the FAC does not satisfy even the minimum pleading requirements of Federal Rule of Civil Procedure 8(a).*fn3

In opposing the motion, plaintiffs ask that should the court grant defendants' motion to dismiss in any respect, it give plaintiffs the opportunity to amend their complaint.*fn4

For the reasons set forth below, defendants' motion to dismiss is GRANTED. Plaintiffs, however, are permitted leave to amend the complaint as to defendant MERS. Defendant AHMSI is hereby dismissed from the action.

BACKGROUND

In January 2006, plaintiffs decided to refinance their home. (Pls.' First Amended Complaint ["FAC"], Docket No. 1-10, filed Oct. 27, 2010, ¶ 48). On February 24, 2006, defendant Chris Carter, an employee of defendant Windsor Capital Mortgage, submitted a loan application for plaintiffs. (FAC ¶ 51). On or about March 24, 2006, plaintiff Lowell Findley executed an Adjustable Rate Note in the amount of $280,000 with lender ABC to refinance the existing mortgage on the property located at 12020 Kimberly Road, Marysville, California 95901. (FAC ¶¶ 2, 47-57); (Defs.' Request for Judicial Notice ["RJN"], Docket No. 5, filed Nov. 2, 2010, Exhibit A).*fn5 A Deed of Trust was also executed on or about March 24, 2006 relating to the property located on Kimberly Road, which named MERS nominee beneficiary for lender ABC and ABC's assignees. (RJN, Exhibit B). Plaintiffs eventually went into default on their loan. (FAC ¶ 60). On April 5, 2010, a Notice of Default and Election to Sell Under Deed of Trust ("Notice of Default") was recorded with the Yuba County Recorder. (RJN, Exhibit D).

On July 20, 2010, plaintiffs filed an action in the Superior Court of California, County of Yuba, against defendants and other parties. (Defs.' Notice of Removal ["NR"], Docket No. 1, filed Oct. 27, 2010, ¶ 1). Defendants subsequently filed a demurrer against all causes of action as well as a motion to strike portions of plaintiffs' complaint. (NR ¶¶ 2-3). On or about October 8, 2010, plaintiffs filed the FAC asserting nine causes of action. (NR ¶ 4). Plaintiffs filed the FAC for harm allegedly "resulting from the Defendants' acts or omissions . . . surrounding the residential loan transaction ("Subject Loan") on the Plaintiffs' residence." (FAC ¶ 2). Plaintiffs generally allege that this action arises out of a predatory lending scheme where they were victimized by mortgage loan related activity involving their residence on Kimberly Road. (FAC ¶ 15).

In addition to various state law claims, plaintiffs' seventh cause of action in the FAC alleges a violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601, et seq. ("RESPA"). Specifically, plaintiffs argue that the payment of a "yeild spread premium" constituted a "kickback" or referral fee in violation of RESPA. (FAC ¶ 149). Further, plaintiffs' RESPA claim alleges that defendants "split charges between them which were connected to transactions involving federally related mortgage loans" and that defendants split charges with other defendants who did not render settlement services. (FAC ¶¶ 151-52). Because plaintiffs' FAC asserted a claim for a violation of a federal statute, defendants filed a Notice of Removal of the action from the Superior Court of California to this court on October 27, 2010.

STANDARD

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 plead a particular fact if that fact is a reasonable inference from facts properly alleged. See, id.

Nevertheless, it is inappropriate to assume that the plaintiff "can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Calif., Inc. v. Calif. State Council of Carpenters, 459 U.S. 519, 526 (1983). Moreover, the court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). Indeed, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)(citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

In ruling upon a motion to dismiss, the court may consider only the complaint, any exhibits thereto, and matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See, Mir v. Little Co. of Mary Hospital, 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. Consumers Union of United States, Inc., 12 F. Supp.2d 1035, 1042 (C.D. Cal. 1998).

Ultimately, the court may not dismiss a complaint in which the plaintiff alleged enough facts to "state a claim to relief that is plausible on its face." Iqbal, 129 S. Ct. at 1949 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Only where a plaintiff has failed to "nudge [his or her] claims across the line from conceivable to plausible," is the complaint properly dismissed. Id. at 1952. When there are well-pleaded factual allegations, "a court ...


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