The opinion of the court was delivered by: Hon. Thomas J. Whelan United States District Judge
ORDER GRANTING IN PART & DENYING IN PART DEFENDANT'S MOTION TO DISMISS [DOC. 27]
Pending before the Court is Defendant Wachovia Mortgage, FSB's motion to dismiss Plaintiff Margaret Cruickshank's Second Amended Complaint ("SAC"). The Court decides the matter on the papers submitted and without oral argument pursuant to Civil Local Rule 7.1(d.1). For the reasons outlined below, the Court GRANTS IN PART and DENIES IN PART Wachovia's motion [Doc. 27].
Plaintiff Margaret Cruickshank, an elderly widow, is the owner of a condominium located at 14740 Plaza Animado #161, San Diego, California (the "Property"). (SAC [Doc. 23], ¶1.) She purchased the Property in 1999 for $138,000. (Id., ¶14.)
On or about February 15, 2005, Mrs. Cruickshank entered into a Pay Option ARM loan with World Savings. (SAC, ¶ 16.) The principal amount of the loan was $250,000. (Id.)
In 2006, Phillip Franklin, a loan officer and/or agent from World Savings, F.S.B., contacted Mrs. Cruickshank about refinancing the Property. (SAC, ¶20.) At the time, Mrs. Cruickshank was 81 years of age, and legally deaf and disabled. (Id., ¶ 15.) She was also unemployed, and received approximately $1,660 in Social Security payments and a surviving-spouse pension benefit through Ford Motor Company. (Id., ¶18.)
According to the SAC, Mrs. Cruickshank notified Franklin that her annual income was insufficient to cover her escalating living and medical expenses, and therefore she inquired about a reverse mortgage. (FAC, ¶21.) Franklin "falsely represent[ed] that she did not qualify for a reverse mortgage. . . ." (Id., ¶22.) Instead, he told her that a "refinance loan was better than a reverse mortgage, with a low fixed rate, including a built-in feature that allowed her to make a low minimum payment for her convenience which would help her financial situation . . . ." (Id., ¶ 24.) Relying on this representation, Mrs. Cruickshank agreed to apply for the recommended Pay Option ARM loan, with a principal balance of $310,000. (Id.) Before the loan closed, however, Franklin convinced Mrs. Cruickshank to a different loan: a $45,000 home equity line of credit ("HELOC") and refinance of the first loan in the amount of $245,000. (Id., ¶25.)
Mrs. Cruickshank alleges that she informed Franklin that her monthly fixed income was $1,660. (SAC, ¶30.) However, this information was disregarded and instead Franklin misstated her monthly income as $6,000 on the loan application in order to ensure that Mrs. Cruickshank would qualify for the HELOC. (Id., ¶30.) Mrs. Cruickshank alleges that she was unaware that the application overstated her income. (Id.) Based upon the falsified documents, on or about March 17, 2006, Mrs. Cruickshank was placed into an adjustable-rate mortgage and the HELOC. (Id., ¶31.)
In April 2006, Mrs. Cruickshank's minimum monthly mortgage payment was $1,204, in addition to a monthly finance charge on the HELOC in the amount of $325. (SAC, ¶34.) Because her monthly income exceeded these payments by only $71, Mrs. Cruickshank was required to draw greater amounts from the HELOC to cover her living and medical costs. (Id.) By May 2007, the HELOC funds ran out, and Mrs. Cruickshank was forced to use her credit cards to make monthly payments. (Id.) In September 2008, Mrs. Cruickshank was hospitalized as a result of the stress caused by the loans. (Id., ¶37.)
On February 4, 2010, Defendant Wells Fargo Bank recorded a Notice of Default and Election to Sell under Deed of Trust, and a Trustee's Sale was scheduled for May 4, 2010. (SAC, ¶39.) On May 3, 2010, Mrs. Cruickshank filed for Chapter 13 Bankruptcy relief. (Id.)
On June 15, 2010, Mrs. Cruickshank filed suit against the defendants in the San Diego Superior Court. (See Removal Notice [Doc. 1], Ex. A.) On July 23, 2010, Defendant Wachovia removed the case to this Court based on diversity jurisdiction. (Id.)
On August 26, 2010, Mrs. Cruickshank filed an FAC, asserting 14 state-based causes of action. Wachovia filed a motion to dismiss based on a number of grounds. On February 27, 2011, this Court issued an order finding, among other things, that the causes of action were time barred. The order granted Mrs. Cruickshank leave to amend certain causes of action.
On March 4, 2011, Mrs. Cruickshank filed the SAC. Defendant again seeks to dismiss the SAC based on ...