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John Shirley, Individually and As Trustee of v. Wachovia Mortgage Fsb and Wells Fargo Bank N.A

March 9, 2011





Before the Court is a Motion to Dismiss filed by Defendant Wachovia Mortgage FSB ("Wachovia"). ECF No. 19. Plaintiffs John F. Shirley ("John") and Julie E. Shirley ("Julie") (collectively, "Plaintiffs") filed an Opposition, and Wachovia filed a Reply. ECF Nos. 22, 24. For the following reasons, the Court GRANTS IN PART 22 and DENIES IN PART Wachovia's Motion.


Plaintiffs filed this action in California state court on July 26, 2010, seeking rescission of a mortgage loan transaction due to 27 alleged violations of the Truth in Lending Act ("TILA") by Wachovia, as well as declaratory and injunctive relief. See ECF No. 1 ("Notice of Removal") Ex. A ("Initial Compl."). Wachovia 2 removed, and on October 27, 2010, Plaintiffs filed a First Amended ECF Nos. 12 ("FAC"), 18.

loan of $1.76 million to the John F. Shirley and Julie E. Shirley Complaint, which the Court accepted as the operative complaint. Plaintiffs allege that on February 29, 2008, Wachovia made a 2003 Trust ("the Trust"), secured by a deed of trust on Plaintiffs' 8 home. FAC ¶ 8. Plaintiffs allege that they sought to rescind this 9 loan on May 3, 2010, claiming Wachovia failed to make disclosures 10 required under TILA. Id. Plaintiffs contend that Wachovia refused to honor their demand for rescission, and rejected an August 31, 14, 2010, they paid Wachovia $1.83 million -- the amount Wachovia 14 claimed was due on the loan. Id. ¶ 12.

that Wachovia violated TILA by failing to make required disclosures to Julie. Plaintiffs admit that John received TILA disclosures 18 from Wachovia, but argue that Wachovia was obligated to make these 19 disclosures to Julie as well because as a settlor and beneficiary 20 of a revocable trust, she had an "ownership interest" triggering

Plaintiffs' second claim is that the TILA disclosures made to

John were defective. Under Regulation Z, a borrower has the right 24 to rescind a refinancing or equity mortgage transaction within 25 three business days of the date the borrower receives the TILA 26 disclosures or the date the borrower receives a notice of a right 27 to cancel, whichever is later -- and within three years if the 28 lender fails to provide such a notice. 12 C.F.R. § 226.15; 15

2010 tender letter. Id. ¶ 10. Plaintiffs allege that on September

Plaintiffs' FAC contains three claims. Their first claim is

TILA. Id. ¶¶ 10-12. 22

U.S.C. § 1635. Plaintiffs allege that the Notice of Right to

Cancel ("Notice") delivered to John stated that his right to 3 rescind the loan expired at midnight on February 26, 2008 -- the 4 same day John received the Notice and signed it. Id. ¶¶ 14-15.

Plaintiffs allege that the date on the Notice was altered by 6 someone other than John to February 23, 2008, and that the Notice 7 contains John's forged initials. Id. ¶ 15. 8

of a temporary restraining order and/or preliminary injunction 10 restraining Wachovia from reporting Plaintiffs' loan to major

credit reporting agencies. Id. ¶¶ 17-19. 12

As to Plaintiffs' first and second claims, Wachovia argues that Plaintiffs' third claim is for injunctive relief in the form

In its Motion, Wachovia seeks dismissal of all three claims.

Wachovia had no obligation to provide TILA disclosures to Julie; 15 that any error in the disclosure to John should be excused as a "typo"; that Plaintiffs' TILA claims are barred by TILA's statute 17 of limitations; that Plaintiffs' request for rescission is mooted 18 by Plaintiffs' subsequent payment in full of the loan; and that

TILA claim. Mot. at 2. Wachovia argues that Plaintiffs' third 21 claim should be dismissed because injunctive relief is a remedy 22 rather than a claim for relief; because it is a state-law claim 23 preempted by the Home Owners' Loan Act ("HOLA"); because Wachovia 24 can demonstrate a reasonable likelihood of success on the merits; 25 and because "even if the requested mandatory injunction were 26 granted, Wachovia neither has the right nor ability to 'delete' the 27 reported information it supplied to credit reporting agencies."


Plaintiffs otherwise fail to plead facts sufficient to constitute a 12(b)(6) "tests the legal sufficiency of a claim." Navarro v.


A motion to dismiss under Federal Rule of Civil Procedure

Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal can be based 5 on the lack of a cognizable legal theory or the absence of 6 sufficient facts alleged under a cognizable legal theory.

1990). Allegations of material fact are taken as true and 9 construed in the light most favorable to the nonmoving party.

1996). "[T]he tenet that a court must accept as true all of the 12 allegations contained in a complaint is inapplicable to legal 13 conclusions. Threadbare recitals of the elements of a cause of 14 action, supported by mere conclusory statements, do not suffice."

Corp. v. Twombly, 550 U.S. 544, 555 (2007)). "When there are well-17 pleaded factual allegations, a court should assume their veracity 18 and then determine whether they plausibly give rise to an 19 entitlement to relief." Iqbal, 129 S. Ct. at 1950. A motion to 20 dismiss should be granted if the plaintiff fails to proffer "enough 21 facts to . . . nudge[] their claims across the line from 22 conceivable to plausible." Twombly, 550 U.S. at 570.

number of facts and documents. ECF No. 20 ("RJN"). Plaintiffs 28 oppose this request. ECF ...

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