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David Caravantes, An Individual v. California Reconveyance

December 22, 2011

DAVID CARAVANTES, AN INDIVIDUAL,
PLAINTIFF,
v.
CALIFORNIA RECONVEYANCE COMPANY, A CALIFORNIA CORPORATION; WASHINGTON MUTUAL BANK, F.A., A FEDERAL SAVINGS BANK ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES; JPMORGAN CHASE BANK, N.A., A NATIONAL BANKING ASSOCIATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES; CHASE HOME FINANCE LLC, A DELAWARE LIMITED LIABILITY COMPANY; VREJ JOUKADARIAN, AN INDIVIDUAL; CLEMENT J. DURKIN, AN INDIVIDUAL; DEBORAH BRIGNAC, AN INDIVIDUAL; ANN THORN, AN INDIVIDUAL; 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 IN PART AND DENYING IN PART MOTION TO DISMISS [Doc. No. 53.]

Presently before the Court is a motion to dismiss Plaintiff David Caravantes ("Plaintiff")'s second amended complaint ("SAC") brought by Defendants California Reconveyance Company ("CRC"), JP Morgan Chase Bank, N.A. ("JP Morgan"), an acquirer of certain assets and liabilities of Washington Mutual Bank from the FDIC acting as receiver, and as sucessor by merger to Chase Home Finance LLC ("Chase"), Deborah Brignac, and Ann Thorn (collectively "Defendants"). [Doc. No. 53.] For the reasons described below, the Court GRANTS IN PART and DENIES IN PART Defendants' motion to dismiss.

BACKGROUND

The following allegations are taken from Plaintiff's SAC. Plaintiff became the owner of property located at 5189 Argonne Court, San Diego, CA 92117 on or about August 15, 2007. [SAC ¶¶ 5, 17.] He acquired the property via a loan from Defendant Washington Mutual Bank, F.A. ("WaMu"). [Id. ¶ 18.] The corresponding Deed of Trust was recorded in San Diego on August 27, 2007. [Id.] The Deed of Trust identified Defendant WaMu as the lender and Defendant CRC as the trustee. [Id.]

Plaintiff appears to have experienced problems in making his loan payments when his income decreased dramatically in 2008. [SAC ¶ 20.] In September 2008, after Defendant WaMu closed, Plaintiff alleges he received a form letter stating that Defendant WaMu had become Defendant JPMorgan. [Id. ¶ 21.] Plaintiff subsequently received statements from Defendant Chase, and he directed payments to Chase, assuming that Chase was the new servicer of his loan. [Id.]

In or around November 2009, Plaintiff received a letter from the Chase Home Ownership Preservation Office stating that many Americans are experiencing difficulty with their mortgage payments and that if Plaintiff was experiencing financial difficulty, there were some options available to him that would assist him with making payments. [SAC ¶ 22, Ex. 1.] Plaintiff subsequently received several additional letters of the same nature. [Id. ¶ 22] According to Plaintiff, none of these letters discussed Plaintiff's actual financial situation. [Id.]

On January 25, 2010, Defendant Chase mailed Plaintiff a letter titled "Notice of Collection Activity," alleging Plaintiff was in default under the terms of his loan. [SAC ¶ 23, Ex. 2.] The letter did not attempt to discuss any options available to Plaintiff to avoid foreclosure other than paying the full amount allegedly due. [Id.] On March 10, 2010, Defendant CRC recorded a Notice of Default on Plaintiff's property. [Id. ¶ 24, Ex. 3.] The Notice of Default was accompanied by a Declaration of Compliance signed by Defendant Clement Durkin for JPMorgan. [Id. ¶ 25, Ex. 3.] The Declaration of Compliance indicates that the "mortgagee, beneficiary or authorized agent tried with due diligence but was unable to contact the borrower" to discuss the borrower's financial situation and to explore options for the borrower to avoid foreclosure as required by Cal. Civ. Code § 2923.5, and that more than thirty days had elapsed since due diligence was completed. [Id. ¶ 26, Ex. 3.] However, except for the generic letters discussed above, none of the Defendants sent any letters or made any phone calls to Plaintiff concerning his personal financial situation and options to avoid foreclosure that were specifically available to him. [Id. ¶ 27.]

On June 11, 2010, Defendant CRC executed a Notice of Trustee's Sale signed by Defendant Brignac, indicating that the sale was scheduled for July 6, 2010 at 10:00 a.m. [Id. ¶¶ 33, 34, Ex. 9.] The Notice of Trustee's Sale was accompanied by a Declaration Pursuant to California Civil Code Section 2923.54 signed by Defendant Thorn, stating that the undersigned loan servicer had complied with the requirements of Section 2923.54. [Id. ¶ 35, Ex. 9.]

On July 6, 2010, Plaintiff filed the present action against Defendants. [Doc. No. 1, Compl.] Shortly thereafter, the Court issued a temporary restraining order and a preliminary injunction enjoining Defendants from foreclosing on Plaintiff's property. [Doc. Nos. 6, 10.] On October 14, 2010, the Court granted in part and denied in part Defendants' motion to dismiss and granted Plaintiff leave to file an amended complaint ("FAC"), which he filed on November 3, 2010. [Doc. Nos. 17-18.] Shortly thereafter, Defendants filed a motion to dismiss Plaintiff's FAC. [Doc. No. 20.] At the hearing on Defendant's second motion to dismiss, the parties indicated that their dispute might be resolved through a loan modification. [Doc. Nos. 26, 46.] Accordingly, the Court directed the parties to discuss loan modification options before the Magistrate Judge. [Id.] Subsequently, the Magistrate Judge issued several orders stating that Plaintiff has submitted a completed application for a loan modification and that his application is currently being reviewed by Defendants. [Doc. Nos. 34, 41, 43, 45, 48, 50.] The last order was issued on October 17, 2011. [Doc. No. 50.]

On August 3, 2011, the Court granted Defendants' motion to dismiss the FAC and granted Plaintiff leave to file a second amended complaint, which he filed on October 24, 2011. [Doc. Nos. 46, 52.] Plaintiff's SAC alleges four causes of action for: (1) violation of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq.; (2) violation of the Home Owner and Equity Protection Act ("HOEPA"), 15 U.S.C. § 1639 and 12 C.F.R. §§ 226.32 et seq.; (3) violation of California's Unfair Competition Law ("UCL"), California Business and Professions Code §§ 17200 et seq.; and (4) violation of California Civil Code § 2923.5. [Doc. No. 52, SAC.] By the present motion, Defendants seek to dismiss Plaintiff's third and fourth causes of action. [Doc. No. 53.]

DISCUSSION

I. Legal Standards for a Motion to Dismiss

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 plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, --- U.S. ---, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556).

However, "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." Twombly, 550 U.S. at 555 (citation omitted). A court need not ...


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