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Constance Solano v. America's Servicing Company

May 3, 2011


The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge


Defendant MortgageIT, Inc. ("MortgageIT") moves for dismissal of Plaintiff's Complaint under Federal Rule of Civil Procedure ("Rule") 12(b)(6), arguing Plaintiff fails to state a viable claim against it. MortgageIT also moves to strike Plaintiff's punitive damages allegations under Rule 12(f). Defendant NDeX West, LLC ("NdeX") joins MortgageIT's dismissal motion.

Defendants Wells Fargo Bank, N.A. dba America's Servicing Company ("Wells Fargo Bank"); Mortgage Electronic Registration Systems, Inc. ("MERS"); and U.S. Bank N.A. as Trustee for Banc of America Funding 2007-6 Trust ("U.S. Bank") (collectively referred to as "Wells Fargo Defendants") also seek dismissal of Plaintiff's claims under Rule 12(b)(6).

Plaintiff filed a late opposition to all three motions.


"In reviewing the dismissal of a complaint, we inquire whether the complaint's factual allegations, together with all reasonable inferences, state a plausible claim for relief." Cafasso, U.S. ex rel. v. General Dynamics C4 Systems, --- F.3d ----, 2011 WL 1053366, at *4 (9th Cir. 2011) (citing Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009)). The material allegations of the complaint are accepted as true and all reasonable inferences are drawn in favor of the plaintiff. See al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). However, this tenant "is inapplicable to legal conclusions." Iqbal, 129 S. Ct. at 1949. Further, "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 557 (2007)). "In sum, for a complaint to survive a motion to dismiss, the nonconclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).


REQUEST FOR JUDICIAL NOTICE Defendants' dismissal motions include requests that the Court take judicial notice of two Deeds of Trust, which are recorded with the Placer County Recorder. (MortgageIT's Req. for Judicial Notice ("RJN") Exs. A, C; Wells Fargo Defs.' RJN, Ex. A.)

"As a general rule, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (internal quotation marks and citation omitted). However, a court may consider matters properly subject to judicial notice. Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). A matter may be judicially noticed if it is either "generally known within the territorial jurisdiction of the trial court" or "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b).

Since the two Deeds of Trust are publically recorded, they are capable of accurate determination and may be judicially noticed. See W. Fed. Sav. & Loan Ass'n v. Heflin Corp., 797 F. Supp. 790, 792 (N.D. Cal. 1992) (taking judicial notice of documents in a county's public record, including deeds of trust). Therefore, the two Deeds of Trust are judicially noticed.

MortgageIT also requests that the Court consider a "Home Equity Credit Line Agreement and Disclosure Statement" between Plaintiff and MortgageIT under the "incorporation by reference doctrine." (MortgageIT's RJN, Ex. B.) owever, since the document is not referenced in the complaint, this request is denied. See In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999) (stating the incorporation by reference doctrine "permits a district court to consider documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleading" (quotation omitted)).


On or about March 23, 2007, Plaintiff obtained two loans, which were secured by her real property, located at 3161 Big Bear Drive, Roseville, CA. (MortgageIT's RJN, Exs. A, C.) The primary loan was for $592,000.00 (the "Primary Loan"), and the second loan was for $83,000.00 (the "Secondary Loan"). Id.

The Deed of Trust on the Primary Loan identifies Mortgage & Investment Consultants, Inc. as the lender, Financial Title Company as trustee, and MERS as beneficiary. Id., Ex. A. The Deed of Trust on the Secondary Loan identifies MortgageIT as the lender, Financial Title Company as trustee, and MERS as beneficiary. Id., Ex. C. Plaintiff alleges Wells Fargo Bank subsequently began servicing the loans. (Compl.¶¶ 2, 21-22.)

On or about March 4, 2010, NdeX West, LLC filed a Notice of Trustee Sale in connection with the Primary Loan, in which it indicated Plaintiff's property was in foreclosure. Id., ¶24, Ex. D.

An Assignment of Deed of Trust dated March 29, 2010, assigned and transferred to U.S. Bank "all beneficial interest under [the] Deed of Trust" on the Primary Loan. (Compl., Ex. E.) U.S. Bank substituted NdeX, West L.L.C., as trustee of the Deed of Trust on the Primary Loan on April 9, 2010. Id., Ex. F.*fn1

Plaintiff alleges the foreclosure sale was scheduled for September 13, 2010. Id., ¶ 24. It is unclear what, if anything, occurred on this date.

Plaintiff's claims stem from her allegations that Defendants have acted improperly from the loans' origin through foreclosure. Id. ¶¶ 25-28.


Plaintiff's Complaint comprises twelve claims. MortgageIT and the Wells Fargo Defendants (the "Movants") challenge the sufficiency of every claim in their dismissal motions.

A. Breach of Contract

Movants seek dismissal of Plaintiff's breach of contract claim, arguing, inter alia, Plaintiff does not allege facts supporting the elements of this claim. (MortgageIT's Mot. 4:11-12; Wells Fargo Defs.' Mot. 7:3-6.)

In California, "[a] cause of action for breach of contract requires proof of the following elements: (1) existence of the contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach." CDF Firefighters v. Maldonado, 158 Cal. App. 4th 1226, 1239 (2008).

Plaintiff's breach of contract claim is based upon allegations that Defendants violated the Home Ownership Equity Protection Act ("HOEPA") by failing to make certain required disclosures prior to when her loan transactions closed; and, by "engaging in a pattern and practice of extending credit to Plaintiff without regard to her ability to pay." (Compl. ¶ 44.) However, a plaintiff "must . . . do something more . . . than merely point to allegations of a statutory violation" to allege a breach of contract claim. Berger v. Home Depot, 476 F. Supp. 2d 1174, 1177 (C.D. Cal. 2007). Further, although Plaintiff references the existence of multiple written agreements in the introductory allegations of her Complaint (a Promissory Note, Deed of Trust and Modification Agreement), it is unclear which, if any, of the agreements form the basis of her breach of contract claim, and Plaintiff does not allege a breach of the terms of any referenced agreement. (Compl. ¶¶ 19, 21, 29.) Therefore, Plaintiff's breach of contract claim against the Movants is dismissed.


Movants also seek dismissal of Plaintiff's 12 U.S.C. § 2607 Real Estate Settlement Procedures Act ("RESPA") claim, arguing, inter alia, it is barred by the one-year statute of limitations. (MortgageIT's Mot. 5:13-16; Wells Fargo Defs.' Mot. 5:16-20.) Plaintiff counters that the statute of limitations should be equitably tolled. (Pl.'s Opp'n ¶ 35.)

"The primary ill that § 2607 is designed to remedy is the potential for unnecessarily high settlement charges, . . . caused by kickbacks, fee-splitting, and other practices that suppress price competition for settlement services. This ill occurs, if at all, when the plaintiff pays for the tainted service, typically at the closing." Jensen v. Quality Loan Serv. Corp., 702 F. Supp. 2d 1183, 1195 (E.D. Cal. 2010) (quoting Snow v. First Am. Title Ins. Co., 332 F.3d 356, 359-60 (5th Cir. 2003)). 12 U.S.C. § 2614 provides that a section 2607 claim "may be brought . . . [within] 1 year . . . from the date of the occurrence of the violation[.]" "Barring extenuating circumstances, the date of the occurrence of the violation is the date on which the loan closed." Ayala v. World Savings Bank, FSB, 616 F. Supp. 2d 1007, 1020 (C.D. Cal. 2009) (internal quotation marks and citation omitted); see also Jensen, 702 F. Supp. 2d at 1195 (stating that "courts have considered the 'occurrence of the violation' as the date the loan closed.").

Here, Plaintiff's loans "closed" on March 23, 2007. Therefore, the one-year statute of limitations expired on March 23, 2008. However, Plaintiff did not file her Complaint in this action until September 10, 2010. Further, neither Plaintiff's complaint nor her opposition explains why she could not have discovered Defendants' alleged section 2607 violation within the one-year statutory period. Therefore, Plaintiff has not shown that the doctrine of ...

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