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Dorothy Lotenero v. Everett Financial Inc.

June 16, 2011




On April 14, 2011, Plaintiff Dorothy Lotenero filed a First Amended Complaint ("FAC") against Defendants Everett Financial, Inc., dba Supreme Lending ("Supreme Lending"), Great American Insurance Co. ("Great American"), and Jesse Alvin Cripps, Sr. ("Cripps"). On May 4, 2011, Supreme Lending and Great American filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, the motion is granted.


Under Federal Rule of Civil Procedure 12(b)(6),a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In reviewing a complaint under Rule 12(b)(6), all allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Marceau v. Blackfeet Hous. Auth., 540 F.3d 916, 919 (9th Cir. 2008); Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir. 1999). The Court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1056-57 (9th Cir. 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). As the Supreme Court has explained:

While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need 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. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

To avoid a Rule 12(b)(6) dismissal, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face[.]" Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010) (citations omitted). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory '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).

If a Rule 12(b)(6) motion to dismiss is granted, "[the] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995). In other words, leave to amend need not be granted when amendment would be futile. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir. 2002).


In 1999, Plaintiff obtained a reverse mortgage in order for her to stay in her home located at 3332 W. Millcreek Drive in Visalia, California. FAC at ¶¶ 1, 7. Under the terms of the reverse mortgage, Plaintiff was not required to make monthly payments to her lender for as long as she remained in her home. Id. at ¶ 7. In addition, the amount owed on her reverse mortgage was payable only after Plaintiff died or elected to move away. Id.

Cripps was employed by Supreme Lending as the manager of Supreme Lending's branch office in Visalia, California. Id. at ¶ 3. On or about February 7, 2007, Cripps, acting on behalf of Supreme Lending, sought out Plaintiff at her church and persuaded her to refinance her reverse mortgage in a larger amount. Id. at ¶ 8. Cripps falsely represented to Plaintiff that she was receiving a new, larger reverse mortgage. Id. Cripps also informed Plaintiff that she would receive $48,000 cash from this new mortgage. Id. Cripps knew that this representation was false because the new mortgage that he was arranging for Plaintiff was not a reverse mortgage, but actually a World Savings' subprime pick-a-pay mortgage. Id. at ¶ 9.

Thereafter, Plaintiff signed the application for the World Savings' subprime pick-a-pay mortgage. Id. at ¶ 10. Plaintiff received $48,278 in cash upon the closing of escrow for the new mortgage. Id. Cripps advised Plaintiff that it would be in her best interest to allow him to establish a savings account for her. Id. Plaintiff endorsed the check for $48, 278 to Cripps. Id. Cripps accepted the check as agent for Supreme Lending and deposited the check in the account of a fictitious entity "Horizontal Financial" in Carson City, Nevada. Id. After Plaintiff was unable to locate Cripps or the bank account that Cripps was supposed to have established for her, Plaintiff filed a report with the Visalia Police Department. Id. at ¶ 11. The Visalia Police Department referred the matter to the Federal Bureau of Investigation. Id. On November 10, 2010, Cripps was indicted by a grand jury for the Eastern District of California. Id. Cripps was later apprehended and arrested in Texas. Id.

Beginning on or about April 1, 2007, Plaintiff made the monthly payments on her new mortgage for approximately 20 months. Id. at ΒΆ 12. After Plaintiff was unable to make her monthly payments, Wells Fargo recorded a Notice of Default on March 26, 2010 and then recorded a notice that the trustee's sale would be held on July 19, 2010. Id. On or about February 1, 2011, Wells Fargo agreed to cancel the foreclosure on the condition that ...

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