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Sean M. Park, Michelle Park v. Wachovia Mortgage

September 30, 2011


The opinion of the court was delivered by: Hayes: Judge:


The matters before the Court are the Motion to Dismiss (ECF No. 118) filed by Wells Fargo Bank ("Wells Fargo") on behalf of Wachovia Mortgage, FSB and Wachovia Mortgage Corporation*fn1 and the Motion to Dismiss filed by attorney Mark G. Rackers. (ECF No. 119).

I. Procedural Background

On July 26, 2010, Plaintiffs Sean M. Park and Michelle Park, proceedingpro se, initiated this action by filing a Complaint. (ECF No. 1). Plaintiffs filed an Amended Complaint on August 11, 2010. (ECF No. 3). On August 25, 2010, Wells Fargo filed a Motion to Dismiss. (ECF No. 11). On January 12, 2011, this Court issued an Order dismissing each of Plaintiffs' claims and permitting Plaintiffs to file a motion for leave to file a second amended complaint. (ECF No. 78).

On January 19, 2011, Plaintiffs filed their Opposition to the Ex Parte Motion to Expunge Notice of Pendency of Action. (ECF No. 80). On January 21, 2011, Wells Fargo filed a Reply. (ECF No. 81). On January 26, 2011, Plaintiffs filed a Motion for Leave to File a Second Amended Complaint. (ECF No. 83).

On April 29, 2011, Plaintiffs' Second Amended Complaint was filed which added Deborah Eisenbraun, Tiffany Duke, and Attorney Mark G. Rackers as Defendants. (ECF No. 114). On May 24, 2011, Wells Fargo filed a Motion to Dismiss on behalf of Wachovia Mortgage, FSB and Wachovia Mortgage Corporation. (ECF No. 118). On May 25, 2011, Defendant Mark G. Rackers filed a Motion to Dismiss. (ECF No. 119). On June 13, 2011, Plaintiffs filed an Opposition. (ECF No. 120). On June 20, 2011, Wells Fargo and Defendant Mark G. Rackers each filed a Reply. (ECF Nos. 121-22).

II. Motions to Dismiss Second Amended Complaint (ECF Nos. 118-19)

A. Allegations of the Second Amended Complaint

On March 28, 2008, Plaintiffs borrowed $1,080,000.00 and entered into a Deed of Trust encumbering property located at 456-458 10th Street, Del Mar, CA 92014. (ECF No. 114 at ¶ 84). Plaintiffs made payments of $5,000.00 for the first 16 months of the loan. Id. Thereafter, Plaintiffs stopped making payments. On November 17, 2009, a notice of default and election to sell was recorded against the property. On August 30, 2010, the property was sold at a trustee's sale.

Plaintiffs' Second Amended Complaint asserts the following seventeen claims: (1) violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et. seq.; (2) fraudulent omissions; (3) violation of California's Business & Professions Code section 17200 for unfair and fraudulent business practices; (4) breach of contract; (5) breach of the covenant of good faith and fair dealing; (6) set aside trustees' sale; (7) to cancel trustee's deed; (8) quiet title; (9) violation of the Real Estate Settlement and Procedures Act ("RESPA"), 12 U.S.C. § 2605 et seq.; (10) equitable tolling; (11) violation of the California Rosenthal Fair Debt Collection Practices Act; (12) violation of the Federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.; (13) wrongful foreclosure; (14) breach of fiduciary duty;

(15) fraud, intentional misrepresentation; (16) fraud, negligent misrepresentation; and (17) accounting. Each claim is asserted against all Defendants which include: Wachovia Mortgage, FSB AKA Wells Fargo Bank, N.A.; Deborah Eisenbraun, in her capacity as sales agent for Wachovia Mortgage, FSB AKA Wells Fargo Bank; Wachovia Mortgage Corporation, in its capacity as servicer and agent for Wachovia Mortgage FSB, AKA Wells Fargo Bank; Executive Trust Services; Attorney Mark G. Rackers; Tiffany Duke, in her capacity as loan counselor and agent for Wachovia Mortgage Corporation; and Does 1-100.

B. Discussion

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure 8(a) provides: "A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

To sufficiently state a claim to relief and survive a Rule 12(b)(6) motion, a complaint "does not need detailed factual allegations" but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "[A] plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (quoting Fed. R. Civ. P. 8(a)(2)). When considering a motion to dismiss, a court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1950 (2009). However, a court is not "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see, e.g., Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 683 (9th Cir. 2009) ("Plaintiffs' general statement that Wal-Mart exercised control over their day-to-day employment is a conclusion, not a factual allegation stated with any specificity. We need not accept Plaintiffs' unwarranted conclusion in reviewing a motion to dismiss."). "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. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted).

1. TILA - First Claim

Equitable Tolling - Tenth Claim

Defendants Wachovia Mortgage, FSB and Wachovia Mortgage Corporation seek to dismiss Plaintiffs' first claim for violation of TILA on the grounds that the terms of the note are clear, the claim is barred by the statute of limitations, Plaintiffs are not entitled to equitable tolling, the claim for rescission is barred by the sale of the property, and Plaintiffs are not entitled to rescission without valid tender.

Plaintiffs contend they did not discover Defendants' TILA violations until they retained the services [of] attorney Nathan Fransen ... and had their loan professionally evaluated." (ECF No. 120 at 19). Plaintiffs contend that the tender rule is not mandatory.

Plaintiffs' first claim for violation of TILA alleges that Wells Fargo failed to comply with the disclosure requirements for the loan. (ECF No. 114 at ¶¶ 103-22). Plaintiffs allege that Defendants failed to "clearly, conspicuously and/or accurately disclose the terms of the unsustainable negative amortizing ... [and t]hese violations are apparent on the face of the TILA Disclosure Forms." Id. at ¶ 105. Plaintiffs allege that the list of payment amounts "have no relation to, and are also not based on the interest rate listed in the [truth in lending disclosure statement]." Id. at ¶ 106(L). Plaintiffs allege that "the only place in the Note where Defendants even inferentially reference negative amortization caused Plaintiffs . to believe that negative amortization is only a mere possibility, rather than an ...

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