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John Obenchain; Gaema Obenchain v. Memorandum and Order Wells Fargo Bank

February 28, 2011


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

Plaintiffs John and Gaema Obenchain ("Plaintiffs") seek redress from Defendants Wells Fargo Bank and Bank of America ("Defendants") for alleged violations of the Truth in Lending Act ("TILA") and the California Business and Professions Code. This Court previously dismissed Plaintiffs' initial Complaint with leave to amend. (ECF No. 16.)

Presently before the Court are Defendants' separate Motions to Dismiss Plaintiffs' First Amended Complaint ("FAC") for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn1 (ECF No. 22 & 23.) For the following reasons, Defendants' Motions to Dismiss are both granted, and the case is remanded to state court.


On August 2, 2007, Plaintiffs refinanced their residential mortgage through Bank of America. As part of the refinance, Plaintiffs paid closing costs and fees in addition to existing mortgages held by Bank of America. Bank of America subsequently sold the loan to Wells Fargo Bank. Plaintiffs allege that they did not receive proper notice of the right to cancel the refinance transaction as required by TILA. On May 15, 2010, Plaintiffs' counsel sent a letter notifying Bank of America that it was in violation of TILA § 1635, and that Plaintiffs were exercising their right to rescind the transaction.

Plaintiffs assert that they received $32,682.57 in additional funds used in connection with the refinance drawn from a new loan of $61,500. (Pl.'s Opp'n to Bank of America 6, ECF No. 26.) Plaintiffs cite the "Buyer/Borrower Closing Statement" attached to the FAC as Exhibit 2 as evidence for the additional funds.

Defendants argue that there were no additional funds advanced by Bank of America in connection with the refinance. (Def. Bank of America's Reply 2-4, ECF No. 27.) Exhibit 2 does in fact show an entry for exactly $32,682.57. However, it does not list any additional funds to Plaintiffs. Instead, $32,682.57 is listed as a "credit" under the heading "Balance Due from Buyer/Borrower." Further, although Exhibit 2 has an entry for $61,500 as a "credit" under the heading "Principal Amount of Loan from Bank of America," it also has an entry for the same amount as a "debit" under the heading "2nd Loan Funds Retained by Len to Bank of America."


On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," 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) (internal citations and quotations omitted). Though "a complaint attacked by a Rule 12(b)(6) motion" need not contain "detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do."

Id. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 2869 (1986)). A plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Id. (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) ("[T]he pleading must contain something more...than...a statement of facts that merely creates a suspicion [of] a legally cognizable right of action.")).

Further, "Rule 8(a)(2)...requires a 'showing,' rather than a blanket assertion, of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirements of providing...grounds on which the claim rests." Twombly, 550 U.S. at 555 n.3 (internal citations omitted). A pleading must then contain "only enough facts to state a claim to relief that is plausible on its face." Id. at 570. If the "plaintiffs...have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed." Id.

Once the court grants a motion to dismiss, they must then decide whether to grant a plaintiff leave to amend. Rule 15(a) authorizes the court to freely grant leave to amend when there is no "undue delay, bad faith, or dilatory motive on the part of the movant." Foman v. Davis, 371 U.S. 178, 182 (1962). In fact, leave to amend is generally only denied when it is clear that the deficiencies of the complaint cannot possibly be cured by an amended version. See DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992); Balistieri v. Pacifica Police Dept., 901 F. 2d 696, 699 (9th Cir. 1990)

("A complaint should not be dismissed under Rule 12(b)(6) unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.") (internal citations omitted).


A. ...

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