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Fernando P. Razon and Minerva O. v. Bank of America

April 8, 2011

FERNANDO P. RAZON AND MINERVA O.
RAZON, PLAINTIFFS,
v.
BANK OF AMERICA, A NATIONAL ASSOCIATION; REGIONAL TRUSTEE SERVICES CORPORATION, A BUSINESS ENTITY, FORM UNKNOWN; PRLAP, INC., A BUSINESS ENTITY, AND
DOES 1-50, INCLUSIVE,
DEFENDANTS.



The opinion of the court was delivered by: United States District Judge Lucy H. Koh

United States District Court For the Northern District of California

ORDER DISMISSING FEDERAL CLAIMS WITH LEAVE TO AMEND IN PART

Defendants Bank of America, N.A. and PRLAP, Inc. move pursuant to Rule 12(b)(6) to dismiss Plaintiffs' Complaint for failure to state a claim upon which relief may be granted.

Defendant Regional Trustee Services Corporation has joined in the motion, and Plaintiffs, proceeding pro se, have timely opposed. Pursuant to Local Civil Rule 7-1(b), the Court concludes 23 that this motion is appropriate for determination without oral argument and vacates the motion 24 hearing and case management conference scheduled for April 14, 2011. Because Plaintiffs have 25 not stated a federal claim under the Truth in Lending Act ("TILA") or the Real Estate Settlement Procedures Act ("RESPA"), the Court dismisses these claims with leave to amend in part. If Plaintiffs cannot remedy the deficiencies in these federal claims, the Court will decline to assert 28 jurisdiction over the remaining state-law claims, and will remand this case to state court.

and security agreement with Defendant Bank of America. Compl. ¶ 2. Under the terms of the 4 agreement, Plaintiffs obtained a loan in the amount of $355,978.00, secured by real property 5 located at 5456 Don Correlli Way, San Jose, CA 95123. Compl. ¶¶ 1-2. Plaintiffs allege that Corporation subsequently acted as trustee, allegedly without proper authorization. Compl. ¶¶ 4-5.

I.Background

On March 16, 2007, Plaintiffs Fernando and Minerva Razon entered into a loan repayment Defendant PRLAP was the original trustee and that Defendant Regional Trustee Services It appears that at some point Plaintiffs may have defaulted on the loan, and, as a result, non-judicial 9 foreclosure proceedings were initiated. A Notice of Default was recorded on January 30, 2009, 10 followed by a Notice of Default and Election to Sell under Deed of Trust, recorded on April 15, 2009.*fn1 Defs.' Req. for Judicial Notice ("RJN") Ex. B-C, ECF No. 5-1. A trustee's sale was scheduled to take place on November 2, 2009. RJN Ex. D. However, the Notice of Default and Election to Sell under Deed of Trust was rescinded on November 1, 2010, RJN Ex. F, and there is 14 no indication that the trustee's sale ever took place. Defendants state that Plaintiffs are not 15 currently in default. Mot. to Dismiss at 1, ECF No. 5.

United States District Court For the Northern District of California

On October 27, 2010, Plaintiffs filed a complaint in the Santa Clara County Superior Court alleging twenty-one causes of action. Of these, only two appear to be federal claims: the fifth cause of action for violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and 19 the sixth cause of action for violations of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq.*fn2 Defendants Bank of America and PRLAP removed this action to federal court on December 22, 2010, on the basis of federal question jurisdiction. Notice of Removal ¶ 5, ECF No. 1. Bank of America and PRLAP subsequently filed a motion to dismiss Plaintiffs' Complaint, in which Regional Trustee Services Corporation has joined. Plaintiffs oppose the 4 motion and request leave to amend should the Court find it appropriate to dismiss any portion of 5 the Complaint.

sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In considering 9 whether the complaint is sufficient to state a claim, the court must accept as true all of the factual 10 allegations contained in the complaint. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). However,

II.Legal standard

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal the court need not accept as true "allegations that contradict matters properly subject to judicial 12 notice or by exhibit" or "allegations that are merely conclusory, unwarranted deductions of fact, or 13 unreasonable inferences." St. Clare v. Gilead Scis., Inc. (In re Gilead Scis. Sec. Litig.), 536 F.3d 1049, 1055 (9th Cir. 2008). While a complaint need not allege detailed factual allegations, it "must 15 contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its 16 face.'" Iqbal, 129 S.Ct. at 1949 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 17 (2007)). A claim is facially plausible when it "allows the court to draw the reasonable inference 18 that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949.

United States District Court For the Northern District of California

"Although a pro se litigant . . . may be entitled to great leeway when the court construes his [or her] pleadings, those pleadings nonetheless must meet some minimum threshold in providing a 21 defendant with notice of what it is that it allegedly did wrong." Brazil v. United States Dep't of Navy, 66 F.3d 193, 199 (9th Cir. 1995). If a court grants a motion to dismiss, leave to amend 23 should be granted unless the pleading could not possibly be cured by the allegation of other facts.

Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000). If amendment would be futile, however, a 25 dismissal may be ordered with prejudice. Dumas v. Kipp, 90 F.3d 386, 393 (9th Cir. 1996).

ruling on a 12(b)(6) motion to dismiss for failure to state a claim. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). However, a court may consider matters of public record outside the 2 pleadings that are properly subject to judicial notice. Id. at 689. Here, Defendants request that the Santa Clara County Recorder's Office: (1) the Deed of Trust, dated March 16, 2007, in the amount 5 of $355,958; (2) a Notice of Default dated January 30, 2009; (3) a Notice of Default and Election 6 to Sell under Deed of Trust dated April 15, 2009; (4) a Notice of Trustee's Sale dated October 19, 2009; (5) a Substitution of Trustee and Full Reconveyance dated March 8, 2007; and (6) a Notice 8 of Rescission of Notice of Default and Election to Sell Under Deed of Trust dated December 6, Plaintiffs oppose the Request for Judicial Notice on grounds that the documents submitted to do not satisfy Federal Rule of Evidence 201. Under Rule 201, a court make take judicial notice of a fact that is "not subject to reasonable dispute in that it is either (1) generally known within the 13 territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort 14 to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). It is well-15 established that recorded deeds and notices of the type submitted Defendants are public records 16 properly subject to judicial notice under Rule 201. See, e.g., Briosos v. Wells Fargo Bank, 737 F. 17 Supp. 2d 1018, 1020 n.1 (N.D. Cal. 2010) (taking judicial notice of deeds and notices recorded in 18 the San Francisco County Recorder's Office); Rosenfeld v. JPMorgan Chase Bank, ...


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