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Steven Leisher, An Individual v. Wachovia Mortgage

January 12, 2011

STEVEN LEISHER, AN INDIVIDUAL,
PLAINTIFF,
v.
WACHOVIA MORTGAGE, INC., A BUSINESS ENTITY OF UNKNOWN FORM; NDEX WEST, LLC, A BUSINESS ENTITY OF UNKNOWN FORM; WORLD SAVINGS BANK, FSB; WELLS FARGO BANK, N.A.; AND ALL PERSONS UNKNOWN, CLAIMING ANY LEGAL OR EQUITABLE RIGHT, TITLE, ESTATE, LIEN, OR INTEREST IN THE PROPERTY DESCRIBED IN THE COMPLAINT ADVERSE TO PLAINTIFF'S TITLE, OR CLOUD ON PLAINTIFF'S TITLE THERETO, AND DOES 1 TO 20, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge:

ORDER

The matter before the Court is the Amended Motion to Dismiss ("Motion to Dismiss") filed by Defendants Wachovia Mortgage, Inc., World Savings Bank, FSB and Wells Fargo Bank, N.A. ("moving Defendants"). (ECF No. 5).

I. Background

On October 8, 2010, Plaintiff Steven Leisher filed a Complaint in San Diego County Superior Court. (ECF No. 1, Ex. A).

A. Allegations of the Complaint

On June 22, 2007, Plaintiff refinanced a real property loan from Defendant World Savings Bank, FSB that was secured by a deed of trust on Plaintiff's residence, located at 16186 Via Del Alba, in Rancho Santa Fe, California. On March 20, 2010, the loan was transferred to Defendant Wells Fargo Bank, N.A., "who is now the beneficial owner of said loan, which is being serviced by Defendant Wachovia." Id. ¶ 14. "Subsequent to refinancing, Plaintiff encountered extreme financial difficulty and hardship not of his own making, and fell behind on his payments on the ... loan." Id. ¶ 15. Plaintiff "enrolled in the so-called 'Mortgage Assistance Plan' offered and promoted by Wachovia to those borrowers having difficulty with their mortgage loan payments." Id. ¶ 16. On August 20, 2010, Plaintiff submitted to Wachovia "a 78-page submission of documents for the loan modification." Id.

¶ 17. On August 25, 2010, "Wachovia sent a letter to [Plaintiff] detailing the documentation they required to 'move forward with the modification process.'" Id. ¶ 18. Plaintiff "promptly complied with the terms of this offer letter." Id. ¶ 19. On August 31, 2010, "Wachovia sent a letter to [Plaintiff] stating that they had not received certain information 'needed to finalize your pending mortgage assistance loan modification' relative to the loan. This letter was received notwithstanding that Plaintiff had already submitted the requested information...." Id. ¶ 20. "In spite of the continued efforts by Plaintiff to comply with these multiple requests..., on ... September 29, 2010, Wachovia sent a letter to [Plaintiff] stating flatly that his modification request had been denied due to 'excessive forbearance.'" Id. ¶ 21. The September 29, 2010 letter states that "Plaintiff's loan 'still may be eligible for other loss mitigation options with Wachovia mortgage, such as payment plan, other in house modification programs, short sale, or deed-in-lieu of foreclosure.'" Id. "The apparent goodwill offered by Wachovia to Plaintiff is merely a deception and a sham, however, because Defendants Wachovia and NDEX have refused to postpone the trustee's sale of the Subject Property long enough to let Plaintiff explore these so-called other options. The sale date is set for October 13, 2010...." Id. ¶ 22.

The Complaint alleges the following claims: (1) injunctive relief; (2) breach of fiduciary duty; (3) fraud; (4) negligent infliction of emotional distress; (5) negligence; (6) conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act ("RICO"); (7) violation of the federal Truth-in-Lending Act ("TILA"); (8) violation of the Real Estate Settlement Procedures Act ("RESPA"); (9) demand for an accounting; (10) rescission; (11) reformation of unconscionable contract; (12) unfair and unlawful business practice in violation of Business and Professions Code § 17200 et seq.; (13) breach of the covenant of good faith and fair dealing; (14) unfair debt collection practices; and (15) predatory lending practices. Plaintiff seeks statutory, compensatory and punitive damages, injunctive relief, rescission, reformation and attorney's fees and costs.

B. Removal

On November 5, 2010, the moving Defendants removed this action to this Court alleging federal question and diversity jurisdiction. (ECF No. 1).

On November 12, 2010, the moving Defendants filed the Motion to Dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 5). The moving Defendants contend that the Complaint should be dismissed with prejudice because the entire Complaint "is utterly vague and fails to allege facts stating a viable claim for relief," and some claims are time-barred and the state law claims are preempted by the federal Home Owners' Loan Act ("HOLA"). (ECF No. 5-2 at 11).

On December 3, 2010, Plaintiff filed an opposition to the Motion to Dismiss. (ECF No. 7). Plaintiff contends that "the pleading of the Complaint at bar is sufficient" and "[i]n the event this Court determines otherwise, leave to amend or replead is respectfully requested." Id. at 4.

II. Discussion

A. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). To sufficiently state a claim to relief and survive a Rule 12(b)(6) motion, a complaint "does not need detailed factual allegations" but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "[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." Id. (quoting Fed. R. Civ. P. 8(a)(2)). When considering a motion to dismiss, a court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1950 (2009). However, a court is not "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted).

B. Federal Law Claims

1. RICO

The moving Defendants contend that the RICO claim should be dismissed on the basis that it is inadequately pled.

"To state a claim under RICO, 18 U.S.C. § 1962(c), a plaintiff must demonstrate: (1) the conduct; (2) of an enterprise; (3) through a pattern; (4) of racketeering activity." Forsyth v. Humana, Inc., 114 F.3d 1467, 1481 (9th Cir. 1997) (citation omitted). RICO defines an "enterprise" to include "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity."

18 U.S.C. § 1961(4). The defendant "must be a separate and distinct entity from the 'enterprise.'" Schreiber Distributing Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1396 (9th Cir. 1986). "Although the Ninth Circuit has not decided whether a parent and its subsidiary satisfies this distinctiveness requirement, other circuits have decided that these entities generally are not sufficiently distinct." In re Countrywide Fin. Corp. Mortg. Marketing and Sales Practices Litig., 601 F. Supp. 2d 1201, 1213-14 (S.D. Cal. 2009) (citations omitted). "Racketeering activity is any act indictable under various provisions of 18 U.S.C. § 1961 and includes the predicate acts ... of mail fraud and wire fraud under 18 U.S.C. §§ 1341 and 1343." Forsyth, 114 F.3d at 1481 (citations omitted). Predicate acts of mail fraud and wire fraud must be alleged with particularity under Federal Rule of Civil Procedure 9(b). See Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397, 405 (9th Cir. 1991). "Federal Rule of Civil Procedure 9(b) requires a pleader of fraud to detail with particularity the time, place, and manner of each act of fraud, plus the role of each defendant in each scheme." Id. (citation omitted).

The Complaint alleges that "Defendants Wachovia, World Savings and Wells Fargo ... engaged in the formation and continued operation of a conspiracy with each other to obtain monies from Plaintiff and other real property owners." (ECF No. 1, Ex. A ¶ 50). The Court takes judicial notice of official records submitted by Defendants showing that at the end of 2007, World Savings Bank changed its name to Wachovia Mortgage, FSB, and on November 1, 2009, Wells Fargo Bank, N.A. became the successor by merger to Wachovia Mortgage, FSB. (ECF No. 5-4, Exs. 1-5).*fn1 Because the only alleged members of the RICO enterprise are successor entities, the Complaint fails to satisfy RICO's distinctiveness requirement. Accordingly, the Complaint fails to adequately allege an enterprise.

The Complaint alleges generally that there existed a pattern of racketeering activity, including mail fraud and wire fraud. (ECF No. 1, Ex. A ¶ 55). The Complaint fails to allege facts concerning the predicate acts with the particularity required by Rule 9(b). Cf. Lancaster Cmty. Hosp., 940 F.2d at 405. The RICO claim is not pled in accordance with the appropriate pleading standards.

The Motion to Dismiss the RICO claim is granted.

2. TILA

The moving Defendants contend that the TILA claim should be dismissed because it is barred by the applicable statute of limitations and is not adequately pled.

The Complaint alleges that "in the course of the transaction for the loan, Defendants violated 15 U.S.C. Section 1632 by failing to properly make the required material disclosures of the terms of said loans, including but not limited to, Annual Percentage Rate, Finance Charge, and Total Payments etc. to Plaintiff." (ECF No. 1, Ex A ¶ 65).

There are two potential remedies to a TILA claim--damages and rescission. See 15 U.S.C. §§ 1635, 1640. The statute of limitations for a TILA damages claim is one year. See 15 U.S.C. § 1640(e). The statute of limitations for a TILA rescission claim is three years. See 15 U.S.C. § 1635(f). The period begins to run from the date the loan closed. See King v. California, 784 F.2d 910, 915 (9th Cir. 1986) ("the limitations period in [the TILA] runs from the date of consummation of the transaction...."). Plaintiff alleges that the loan transaction at issue closed on June 22, 2007. (ECF No. 1, Ex. A ¶ 14). Plaintiff filed the Complaint on October 8, 2010, more than three years after the loan closed. The statute of limitations has run on both the TILA damages claim and the TILA rescission claim. Plaintiff does not allege facts indicating that the doctrine of equitable tolling should suspend the TILA limitations period. Cf. King, 784 F.2d at 915. For this reason, Plaintiff's TILA claim is dismissed.

Even if the statute of limitations did not bar Plaintiff's TILA claim, the Complaint fails to allege "non-conclusory factual content" which is "plausibly suggestive of a [TILA] claim entitling the plaintiff to relief." Moss, 572 F.3d at 969. The allegations related to the TILA claim fail to satisfy the pleading standards of Rule 8(a) of the Federal Rules of Civil Procedure. See Twombly, 550 U.S. at 555 ("[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.") (quoting Fed. R. Civ. P. 8(a)(2)).

The Motion to Dismiss the TILA claim is granted.

3. RESPA

The moving Defendants contend that the RESPA claim should be dismissed because it is barred by the applicable statute of limitations and is not adequately pled.

The Complaint alleges:

In the course of the transaction for the loan, Defendants violated Section 8(a) of RESPA which prohibits both the giving and acceptance of 'any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service ... shall be referred to any person' [12 U.S.C. § 2607(a)], including but not limited to, by unnecessarily driving up settlement costs, by failing to disclose business relationships between service providers, by failing to properly follow notice of transfer provisions, by failing to properly inform Plaintiff about all closing costs. (ECF No. 1, Ex A ¶ 73).

Violations of RESPA sections 2607 and 2608 are subject to a one-year statute of limitations. See 12 U.S.C. ยง 2614. The RESPA statute of limitations runs "from the date of the occurrence of the violation." Id. Plaintiff's RESPA claim appears to be based on allegations of failure to disclose during loan origination in June 2007. The Complaint fails to adequately allege that the RESPA claim was filed ...


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