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Catarino Mendoza v. Wilmington Finance

September 21, 2011

CATARINO MENDOZA,
PLAINTIFF,
v.
WILMINGTON FINANCE;
FIVE STAR INVESTMENT AND REALTY; NEW CENTURY; NORTH AMERICAN TITLE COMPANY; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; VERICREST FINANCIAL, INC.; AND DOES 1 THROUGH 100, INCLUSIVE,
DEFENDANTS.



ORDER GRANTING MERS AND 9 VERICREST'S MOTION TO DISMISS AND DENYING MERS AND VERICREST'S MOTION TO STRIKE 1

I. INTRODUCTION

Plaintiff Catarino Mendoza ("Plaintiff") commenced this action 21 on December 20, 2010, seeking damages, declaratory, and injunctive 22 relief for claims arising out of a 2005 mortgage agreement. ECF 23 No. 1 ("Compl."). Plaintiff filed a First Amended Complaint 24 ("FAC") on February 11, 2011. ECF No. 7 ("FAC"). Now before the 25 Court are a Motion to Dismiss and a Motion to Strike Plaintiff's 26 FAC brought by Defendants Mortgage Electronic Registration Systems, 27 Inc. ("MERS") and Vericrest Financial, Inc. ("Vericrest") 28 (collectively "Movants"). ECF Nos. 37 ("Mot. to Dismiss"); ("Mot. to Strike"). Plaintiff filed an Opposition to both motions 2 and Movants filed a Reply. ECF Nos. 42 ("Opp'n"), 43 ("Reply").

For the following reasons, the Court GRANTS Movants' Motion to 4 Dismiss, dismissing all claims against Movants WITH PREJUDICE, and 5 DENIES Movants' Motion to Strike as moot.

II. BACKGROUND

The following allegations are taken from Plaintiff's FAC. Plaintiff is a resident of San Bruno, California. FAC ¶ 1. Around 10 February 9, 2005, Plaintiff entered into two loan repayment and 9 security agreements with defendant Wilmington Finance 12 ("Wilmington"). Id. ¶ 3. MERS is the "current mortgage 13 nominee/beneficiary" of the loan. Id. ¶ 10. Plaintiff does not 14 allege any facts concerning Vericrest other than that it was 15 "another mortgage lender." Id. ¶ 11.

Under the loan, Plaintiff borrowed $584,000 to refinance his 17 personal residence in San Bruno. Id. ¶¶ 3, 4. The terms of the 18 loan included an initial two-year fixed interest rate of 6.5 19 percent followed by an adjustable rate based on the six-month LIBOR 20 index plus 6.25 percent. Id. ¶ 4. Plaintiff states that the loan 21 will eventually adjust to 12.5 percent, bringing Plaintiff's 22 monthly payment from $3,691.28 to $6,232.79, which he characterizes 23 as "extreme payment shock." Id. ¶ 4. In addition, the loan has a 24 two-year prepayment penalty requiring Plaintiff to pay six months 25 advance interest if he makes a full prepayment or partial 26 prepayment of more than 20 percent of the original principal amount 27 in any twelve-month period. Id. ¶ 29. 28

Plaintiff alleges that Defendants designed the loan such that negative amortization would occur, making foreclosure inevitable. 2 Id. ¶ 15. Plaintiff alleges that the loan was underwritten without 3 proper due diligence because Wilmington failed to adequately verify 4 Plaintiff alleges that a forensic audit of Plaintiff's loan 6 documents revealed legal violations in the handling and processing 7 of Plaintiff's loan, giving rise to a number of his causes of 8 action. Id. ¶ 37. While Plaintiff does not claim to be unable to 9 speak English, he does state that English is not his primary 10 language and that he "does not have comprehensive English reading or writing skills" or "an adequate command of the English 12 language." Id. ¶ 31. Plaintiff alleges that he was unable to 13 understand many of the provisions and terms of the loan agreement 14 because documentation was not provided to him in his native 15 language. Id. ¶¶ 31, 117.

17 and other Defendants: (1) declaratory relief; (2) injunctive 18 relief; (3) failure to perfect interest in the deed of trust under 19 California Commercial Code § 9313 ("failure to perfect"); (4) 20 breach of California's covenant of good faith and fair dealing 21 § 1601 ("TILA"); (6) violation of the Real Estate Settlement 23 California Civil Code §§ 1918-1921; (8) violation of California 25 1916.7(a)(4)(B); (10) violation of California Civil Code § 2932.5; (13) fraud; (14) unfair and deceptive acts and practices ("UDAP"); Plaintiff's income. Id. ¶ 32. 5

Plaintiff brings eighteen causes of action against the Movants ("bad faith"); (5) violation of the Truth in Lending Act, 15 U.S.C. 22 Procedures Act, 12 U.S.C. §§ 2601-17 ("RESPA"); (7) violation of 24 Civil Code § 1916.7(b)(2); (9) violation of California Civil Code § 26 (11) violation of California Civil Code § 1632; (12) rescission;

(15) breach of fiduciary duty; (16) unconscionability; (17) 2 predatory lending under California Business and Professions Code § 3 Defendant AIG, formerly known as Wilmington Finance, 5 previously brought a Motion to Dismiss the FAC. ECF No. 22. On 6 June 6, 2011, the Court granted AIG's motion, dismissing all claims 7 against AIG with prejudice. ECF No. 34 ("June 6, 2011 Order").

17200 ("UCL"); and (18) quiet title. Id. at ¶¶ 47-157. 4

III. LEGAL STANDARD

12(b)(6) "tests the legal sufficiency of a claim." ...


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