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Louis Zirelli v. Bac Home Loan Servicing

December 6, 2011

LOUIS ZIRELLI,
PLAINTIFF,
v.
BAC HOME LOAN SERVICING, L.P.; BANK OF AMERICA, N.A.; MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC.; QUALITY LOAN SERVICE CORPORATION; LSI TITLE COMPANY; AND DOES 1 THROUGH 100, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER DISMISSING PLAINTIFF'S FEDERAL CLAIMS

Pending are three dismissal motions under Federal Rule of Civil Procedure ("Rule") 12(b)(6); one is brought by BAC Home Loans Servicing, L.P., Bank of America, N.A., and Mortgage Electronic Registration Systems, Inc. (collectively, "the jointly moving Defendants"), another by Quality Loan Service Corporation ("Quality"), and the third is brought by LSI Title Company ("LSI"). (ECF Nos. 18, 20, 44.) Each movant argues Plaintiff's claims alleged in his First Amended Complaint ("FAC") under both federal and state law are insufficient to state actionable claims. Plaintiff opposes each motion and in the alternative requests leave to amend. (ECF Nos. 34, 29, 45.)

I. SUBJECT MATTER JURISDICTION

Plaintiff alleges in the FAC that subject matter jurisdiction is based on federal question and diversity of citizenship jurisdiction. However, Plaintiff has not alleged sufficient facts to establish diversity of citizenship jurisdiction since he has not sufficiently alleged the citizenship of four of the business-entity Defendants.

A "plaintiff has the burden of pleading the existence of the court's jurisdiction and, in a diversity action, the plaintiff must state all parties' citizenships such that the existence of complete diversity can be confirmed." Chem. Leaman Tank Lines, Inc. v. Aetna Cas. and Sur. Co., 177 F.3d 210, 222 n.13 (3d Cir. 1999) (internal citation omitted). "In cases where entities rather than individuals are litigants, diversity jurisdiction depends on the form of the entity. For example, . . . a corporation is a citizen only of (1) the state where its principal place of business is located, and (2) the state in which it is incorporated." Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (internal citation omitted).

Accordingly, federal question is the sole potential basis of subject matter jurisdiction. However, as will be discussed below, Plaintiff's federal claims are insufficiently pled. Since it is unclear whether Plaintiff will be able to state an actionable federal question, and thereby establish the existence of this Court's jurisdiction, in consideration of principles of judicial economy and comity only Plaintiff's federal claims are addressed. See Gonzalez v. Recontrust Co., No. C 08-05485 JW, 2009 WL 656275, at *4 (N.D. Cal. Mar. 12, 2009) ("since supplemental jurisdiction is derivative, a court should not exercise supplemental jurisdiction until after it has independently acquired jurisdiction over a federal cause of action"). Plaintiff will be given time to amend his federal claims to allege an actionable federal question; if Plaintiff can properly allege a federal cause of action, Defendants may file a motion challenging the sufficiency of the claims in the amended complaint. Further, "if Plaintiff[] choose[s] to file an amended complaint, Plaintiff[] should re-evaluate the arguments raised by Defendants in support of their motions to dismiss the state law claims." Manuel v. Discovery Home Loans, No. C 10-01185 JSW, 2010 WL 2889510, at *5 (N.D. Cal. July 22, 2010).

II. LEGAL STANDARD

To avoid dismissal under Rule 12(b)(6), a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007). When deciding a Rule 12(b)(6) motion, the material allegations of the complaint are accepted as true, and all reasonable inferences are drawn therefrom in the plaintiff's favor. See al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. (quoting Twombly, 550 U.S. at 555, 557) (internal citation omitted). "In sum, for a complaint to survive a motion to dismiss, the nonconclusory '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).

III. ALLEGATIONS IN THE FIRST AMENDED COMPLAINT

Plaintiff alleges he "is the owner of 170 Hale Street, Auburn, CA 95603," and "[o]n or about May 27, 2004, Plaintiff executed a written DEED OF TRUST . . . and security instrument" concerning this property. (FAC ¶¶ 1, 19; Ex. B.) Plaintiff alleges he is "facing the pending loss of his home through foreclosure initiated and advanced by Defendants in violation of the notice and standing requirements of California foreclosure law." Id. ¶ 16. Further, Plaintiff alleges "[t]he foreclosure on [his] home is based upon a Deed of Trust that was flawed at the date of origination of the loan." Id. ¶ 20. Plaintiff also alleges there are "Chain of Title Problems" which preclude foreclosure. Id. ¶¶ 46-50.

Plaintiff's FAC includes five federal claims, each of which is alleged under a separate federal Act: (1) Home Ownership Equity Protection Act ("HOEPA"); (2) Real Estate Settlement Procedures Act ("RESPA"); (3) Truth in Lending Act ("TILA"); (4) Fair Credit Reporting Act ("FCRA"); and (5) Civil Racketeer Influenced and Corrupt Organizations Act ("RICO"). Id. ¶¶ 61-88, 116-136.

IV. DISCUSSION

A. HOEPA and TILA

The jointly moving Defendants argue "Plaintiff's claim for rescission under TILA and HOEPA is barred by a three-year statute of limitations to which equitable ...


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