The opinion of the court was delivered by: United States District Judge Oliver W. Wanger
ORDER RE: DEFENDANT'S MOTION TO DISMISS (Doc 6)
Plaintiffs Gerald Lacap and Grace Mesde Lacap ("Plaintiffs") filed suit against Hillsborough Mortgage Co., LLC ("Hillsborough") and Amtrust Bank, a division of NYCB Mortgage Co., LLC ("AmTrust"). First Amended Complaint, Doc. 1-2 ("FAC"). The Federal Deposit Insurance Corporation, in its capacity as Receiver ("FDIC-R"), was substituted by order of the state court in the place of AmTrust. The FDIC-R timely removed this case to the federal court. The FAC alleges misrepresentation, promises made without intent to perform, and violations of California Business and Professions Code § 17200 by Hillsborough and AmTrust. FAC at ¶¶ 42-67. Plaintiffs seek a judgment voiding the Trustee's Sale of Plaintiffs' property and any documents recorded against the Plaintiffs' fee simple title as a result of the Trustee's Sale, rescission of the written agreement, and damages. FAC at ¶¶ 68-70.
Before the Court for decision is Defendant FDIC-R's motion to dismiss for lack of subject matter jurisdiction (Doc. 6, filed May. 18, 2011) pursuant to Federal Rules of Civil Procedure 12(b)(1). Defendant argues that because the Plaintiffs did not exhaust their administrative remedies as required by 12 U.S.C. §§ 1821, et seq., no court has the jurisdiction to hear plaintiffs' claims. Plaintiffs have not filed an opposition.
Plaintiffs' claims arise out of two loans from Hillsborough and AmTrust, used by Plaintiffs to purchase a home located at 3211 West Ceres Street, Visalia, California ("Subject Property"). FAC at ¶ 21. Two deeds of trust securing the two adjustable rate mortgages made to Plaintiffs were recorded on April 28, 2006.
Doc. 6-1. The Plaintiffs later defaulted on the loans when the rates automatically adjusted so as to require monthly payments exceeding Plaintiffs' means to pay. FAC at ¶¶ 21-41. This default resulted in a Notice of Default and the recording of a Trustee's Deed on August 18, 2009 that transferred title to the Subject Property to AmTrust. Doc. 6-1. AmTrust later transferred the property to the Federal National Mortgage Association on November 19, 2009. Doc. 6-1.
The following month, the Department of the Treasury declared AmTrust insolvent and appointed the FDIC-R to act as AmTrust's Receiver. Though the FDIC-R then transferred all of AmTrust's assets, and some of its liabilities, to New York Community Bank, contingent liabilities remained with AmTrust and were subject to the administration of the Receiver. Doc. 6-1.
Plaintiffs' first claim alleges that Hillsborough and Amtrust engaged in intentional misrepresentation by making statements informing Plaintiffs they were receiving a fixed rate mortgage, while in fact setting up an adjustable rate mortgage. FAC at ¶¶ 42-48. Plaintiffs allege that Hillsborough and AmTrust further engaged in misrepresentation by assuring Plaintiffs that they would work with Plaintiffs to modify their mortgage when they never had any intention of doing so. FAC at ¶ 44.
The second claim alleges that Hillsborough and AmTrust made promises without intent to perform by promising a fixed rate mortgage while knowingly setting up an adjustable rate mortgage and by later promising to restructure the mortgage solely to keep Plaintiffs from fully discovering the deceit. FAC at ¶¶ 49-53.
The third, and final, claim alleges that Hillsborough and AmTrust violated California Business & Profession Code § 17200, et seq., and California Financial Code § 22302 by engaging in the above mentioned actions and by entering into an unconscionable contract with Plaintiffs. FAC at ¶¶ 54-64.
After learning of Plaintiffs' claims, the FDIC-R sent Plaintiffs, in care of their attorney of record, Gary Lane, written notice explaining the mandatory procedures for asserting a claim against the Receiver ("Claims Notice") on December 7, 2010. Declaration of Nicholas J. Howard, Doc. 6-2, ("Howard Decl.") at ¶ 4. Though March 10, 2010 had initially been established as the Claims Bar Date for the AmTrust Receivership, because FDIC-R learned of Plaintiffs' claims after this date had passed, the FDIC-R allowed Plaintiffs until March 7, 2011 to submit their proof of claim. Howard Decl. at ¶ 9. As of May 1, 2011, Plaintiffs had not submitted any claims to the Receiver. Howard Decl. at ¶ 12.