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Gonzalo Espinoza, An Individual; and v. Bank of America

July 6, 2011

GONZALO ESPINOZA, AN INDIVIDUAL; AND
ROSALBA ESPINOZA, AN INDIVIDUAL,
PLAINTIFFS,
v.
BANK OF AMERICA, N.A., A NORTH CAROLINA CORPORATION; AND SRA ASSOCIATES, INC., A NEW JERSEY CORPORATION; AND DOES 1-20, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

[Doc. No. 6]

Defendant Bank of America approved Plaintiffs' "short sale" of real property to a third party. When Bank of America's agent, Defendant SRA Associates, attempted to collect the unpaid balance, Plaintiffs filed suit in state court, seeking a declaratory judgment that California's "anti-deficiency" statutes bar Defendants from collecting the unpaid balance. Defendants removed the action to this Court and filed a motion to dismiss. For the reasons stated below, the Court GRANTS Defendants' motion and DISMISSES Plaintiffs' complaint WITHOUT PREJUDICE.

BACKGROUND

The following background is taken from Plaintiffs' complaint unless otherwise noted.

In late 2004, Plaintiffs purchased property located in San Diego County at 397 Camino Elevado, Bonita, CA 91902. The purchase was financed with two mortgages, and the mortgages were secured by deeds of trust (DOT 1 and DOT 2) that were executed and recorded.

Over the next two years, Plaintiffs engaged in a series of additional finance transactions.*fn1

By the end of 2007, Plaintiffs' property was secured by two deeds of trust, DOT 3 (with Washington Mutual Bank) and DOT 5 (with Bank of America); all other deeds of trusts had been terminated.

In October 2009, Plaintiffs entered into an agreement with a third party for a "short sale." Because the agreement was designed to alienate the property for less than the full amount owed on the property, it was contingent on the approval of the two lien holders, Chase Home Finance (as successor-in-interest to Washington Mutual Bank) and Bank of America. Plaintiffs obtained approval for the "short sale" from Chase Home Finance and Bank of America and then closed escrow on the "short sale." On April 1, 2010, Bank of America executed a reconveyance deed that reconveyed DOT 5 back to Plaintiffs, and Plaintiffs transferred ownership of the property to the new buyer.

In November 2010, Defendant SRA Associates, acting on behalf of Bank of America, sent a collection letter to Plaintiffs demanding payment of a $79,652.98 balance. Plaintiffs' obligation to pay the $79,652.98 balance is the subject of this action.

Plaintiffs filed suit in San Diego Superior Court, and Defendants removed the action to this Court on April 27, 2011. [Doc. No. 1.] Plaintiffs seek a declaratory judgment that California's "anti-deficiency" statutes bar Defendants from collecting on the $79,652.98 balance. Defendants filed the present motion to dismiss on May 4, 2011. [Doc. No. 6.] The motion is fully briefed and suitable for disposition without oral argument pursuant to Local Civil Rule 7.1(d).

DISCUSSION

I. Legal Standard for a Rule 12(b)(6) Motion to Dismiss

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a) (2009). A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pled in the complaint as true, and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has "facial plausibility when the ...


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