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Anne Jennings v. Washington Mutual Bank

February 25, 2011


The opinion of the court was delivered by: Craig M. Kellison United States Magistrate Judge


Plaintiff, proceeding in this action in propria persona, brings this civil action pursuant to, inter alia, the Real Estate Settlement Procedures Act, 12 U.S.C. § 2603, et seq., and the Truth in Lending Act, 15 U.S.C. § 1601, et seq. This action was removed to this court from the Plumas County Superior Court on August 9, 2010. Pending before the court is defendants' unopposed motion to dismiss (Doc. 10). As no opposition was filed, the hearing on the motion was taken off calendar pursuant to Local Rule 230(g).

I. Background

This foreclosure action was removed from state court to this court on August 9, 2010, by defendants JP Morgan Chase Bank, N.A., an Acquirer of Certain Assets and Liabilities of Washington Mutual Bank from the FDIC Acting As Receiver ("JP Morgan"), Chase Home Finance LLC ("Chase"), and Mortgage Electronic Registration Systems, Inc. ("MERS"). The complaint alleges claims for predatory lending practices in violation of Home Ownership and Equity Protection Act ("HOEPA") (15 U.S.C. § 1637), Truth in Lending Act ("TILA") (15 U.S.C. § 1601), Real Estate Settlement Procedures Act ("RESPA") (26 U.S.C. § 2605), conspiracy, aiding and abetting, intentional misrepresentation/fraud, violation of California Corporation Code, accounting, unfair business practices, breach of implied warranty of good faith and fair dealing, declaratory relief, quiet title and injunctive relief. Defendants move to dismiss for failure to state a claim in regard to all claims, for failure to specifically plead fraud, claims are untimely and barred by the applicable statutes of limitations, and that JP Morgan did not assume any liabilities arising from claims by borrowers of Washington Mutual Bank.

II. Motion to Dismiss

Defendants filed a motion to dismiss, or in the alternative for a more definite statement, pursuant to Federal Rules of Civil Procedure 12(b)(6), (e). Defendants argue that Plaintiff's claims are unavailable, she fails to allege facts sufficient to state a claim, and are vague, ambiguous, and untimely.

A. Legal Standards

In considering a motion to dismiss, the court must accept all allegations of material fact in the complaint as true. See Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). The court must also construe the alleged facts in the light most favorable to the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see also Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740 (1976); Barnett v. Centoni, 31 F.3d 813, 816 (9th Cir. 1994) (per curiam). All ambiguities or doubts must also be resolved in the plaintiff's favor. See Jenkins v. McKeithen, 395 U.S. 411, 421 (1969). However, legally conclusory statements, not supported by actual factual allegations, need not be accepted. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009). In addition, pro se pleadings are held to a less stringent standard than those drafted by lawyers. See Haines v. Kerner, 404 U.S. 519, 520 (1972).

Rule 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief" in order to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). However, in order to survive dismissal for failure to state a claim under Rule 12(b)(6), a complaint must contain more than "a formulaic recitation of the elements of a cause of action;" it must contain factual allegations sufficient "to raise a right to relief above the speculative level." Id. at 555-56. The complaint must contain "enough facts to state a claim to relief that is plausible on its face." Id. 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." Iqbal, 129 S. Ct. at 1949. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Bell Atl. Corp., 550 U.S. at 556). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility for entitlement to relief." Id. (quoting Bell Atl. Corp., 550 U.S. at 557).

To determine whether a complaint states a claim upon which relief can be granted, the court generally may not consider materials outside the complaint and pleadings. See Cooper v. Pickett, 137 F.3d 616, 622 (9th Cir. 1998); Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994). The court may, however, consider: (1) documents whose contents are alleged in or attached to the complaint and whose authenticity no party questions, see Branch, 14 F.3d at 454;

(2) documents whose authenticity is not in question, and upon which the complaint necessarily relies, but which are not attached to the complaint, see Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001); and (3) documents and materials of which the court may take judicial notice, see Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994).

Finally, leave to amend must be granted "[u]nless it is absolutely clear that no amendment can cure the defects." Lucas v. Dep't of Corr., 66 F.3d 245, 248 (9th Cir. 1995) (per curiam); see also Lopez v. Smith, 203 F.3d 1122, 1126 (9th Cir. 2000) (en banc).

B. Discussion

1. Assumption of Liability by JP Morgan

When JP Morgan took over Washington Mutual's assets, it did not assume liabilities of the kind alleged by plaintiff. Article II of the Purchase and Assumption Agreement provides in part:

2.5 Borrower Claims - Notwithstanding anything to the contrary in this Agreement, any liability associated with borrower claims for payment of or liability to any borrower for monetary relief, or that provide for any other form of relief to any borrower. . . are specifically not assumed by the Assuming Bank. (Defs.' Request for Judicial Notice ("RJN") Ex. 3 at 9.)

Based on the aforementioned agreement, any allegation in the complaint which assumes that JP Morgan took over any alleged liabilities of Washington Mutual cannot be maintained.

2. Truth in Lending Act

A lender's violation of TILA allows the borrower to seek damages or to rescind a consumer loan secured by the borrower's primary dwelling. There is a one-year statute of limitations applicable to TILA damages claims. See 15 U.S.C. § 1640(e). The limitations period for damages is subject to equitable tolling. See King v. California, 784 F.2d 910, 915 (9th Cir. 1896). Here, plaintiff's TILA violations stem from the loan application process, wherein plaintiff argues the defendants failed to verify plaintiff's ability to repay the loan. Thus, the limitations period in this case accrued at the time Plaintiff signed the loan documents, in March 2007. See Meyer v. Ameriquest Mortg. Co., 342 F.3d 899, 902 (9th Cir.2003). Nothing in plaintiff's complaint indicates the applicability of equitable tolling, nor does plaintiff argue that it should apply. See King v. California, 784 F.2d 910, 915 (1986). Accordingly, Plaintiff's claims for damages under TILA are now time-barred. However, Plaintiff has also requested rescission.

As to plaintiff's claim for rescission based on violations of TILA, "an obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first . . . ." 15 U.S.C. § 1635(f). Plaintiff's claims for rescission also appear to be time barred as more than three years passed between the time plaintiff entered into the loan agreement (March/April 2007) and the filing of the complaint herein (July 2010). In addition, a claim for recession requires a plaintiff to allege the ability to tender the loan proceeds or ability to pay back what she has received. See e.g., Yamamoto v. Bank of N.Y., 329 F.3d 1167, 1170 (9th Cir. 2003), Garza v. Am. Home Mortgage, 2009 WL 188604 at *5 (E.D. CA 2009). Although the complaint alludes to plaintiff's willingness to tender, there are no allegations that she is actually able to repay the loan proceeds. Thus, Plaintiff's claims under TILA are time barred and should be dismissed.


Plaintiff's claims under HOEPA are similarly barred by the applicable statute of limitation. Claims under HOEPA, which is a part of TILA, must be brought within one year of the occurrence of the violation. See 15 U.S.C. ยง 1640(e). As discussed above, plaintiff entered into the loan agreement more than three years prior to filing the ...

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