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Debra King v. Capitol Commerce Mortgage Co.

January 11, 2012

DEBRA KING,
PLAINTIFF,
v.
CAPITOL COMMERCE MORTGAGE CO., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

Before the Court are Defendants' Motions to Dismiss (ECF Nos. 20 and 21) and Plaintiff's Motion for Preliminary Injunction (ECF No. 31).*fn1 The motions are fully briefed. For the reasons that follow, the Motions to Dismiss are GRANTED and the Motion for Preliminary Injunction is DENIED as MOOT.

BACKGROUND

In March 2003, Plaintiff purchased a home and financed it through a mortgage loan obtained from Defendant Capitol Commerce Mortgage Company secured by property located in Meadow Vista, California. Plaintiff later attempted, and failed, to obtain a loan modification. A Notice of Default was recorded on the property in December 2010. In March 2011, Defendant ReconTrust filed a notice of Trustee Sale. Foreclosure commenced in May 2011. The property is scheduled for a trustee's sale on January 17, 2012.

On May 5, 2011, Plaintiff filed her Original Complaint, which raised thirteen causes of action against Defendants generally related to the financing of her home. ECF No. 2. On August 8, 2011, this Court dismissed the Original Complaint, finding the federal claims as alleged either lacked merit or were inadequately pleaded, but granted leave to amend.*fn2 ECF No.12. Plaintiff thereafter filed her First Amended Complaint ("FAC") and the Defendants filed the instant Motions to Dismiss, which were taken under submission on November 16, 2011. On December 14, 2011, Plaintiff filed her Motion for Preliminary Injunction.

ANALYSIS

Because the Court's denial of Plaintiff's Motion for a Preliminary Injunction relates to the merits of her claims, the Court will first address the Motions to Dismiss.

I. Motions to Dismiss

A. Standard

On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief" in order to "give the defendant fair notice of what the...claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964 (2007) (internal citations and quotations omitted). Though "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 1964-65 (internal citations and quotations omitted). A plaintiff's factual allegations must be enough to raise a right to relief above the speculative level. Id. at 1965 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004) ("The pleading must contain something more...than...a statement of facts that merely creates a suspicion [of] a legally cognizable right of action")).

Moreover, "Rule 8(a)(2)...requires a 'showing,' rather than a blanket assertion of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirements of providing not only 'fair notice' of the nature of the claim, but also 'grounds' on which the claim rests." Twombly, at 1965, n.3 (internal citations omitted). A pleading must contain "only enough facts to state a claim to relief that is plausible on its face." Id. at 1960; see also Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009). If the "plaintiffs...have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed." Id.

A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. Rule 15(a) empowers the court to freely grant leave to amend when there is no "undue delay, bad faith[,] dilatory motive on the part of the movant,...undue prejudice to the opposing party by virtue of...the amendment, [or] futility of the amendment...." Foman v. Davis, 371 U.S. 178, 182 (1962). Leave to amend is generally denied when it is clear the deficiencies of the complaint cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992); Balistieri v. Pacifica Police Dept., 901 F. 2d 696, 699 (9th Cir. 1990) ("A complaint should not be dismissed under Rule 12(b)(6) unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.")(internal citations omitted).

B. Analysis

Plaintiff's FAC adds additional factual allegations to those presented in her Original Complaint, now asserting nine causes of action, and adds Bank of America, N.A. ("BANA") as a defendant.*fn3

At issue is whether Plaintiff has plead sufficient facts as a general matter. Although the complaint does not need detailed factual allegations, it must still provide sufficient facts alleged under a cognizable theory.

1. Violations of TILA

Plaintiff's first cause of action asserts that all the Defendants violated the Truth in Lending Act ("TILA") and Regulation Z, a Federal Reserve regulation implementing TILA. The Court previously denied Plaintiff's TILA claim on the basis that (1) she had failed to adequately plead that she exercised the requisite due diligence in bringing this claim before the statute of limitations expired; and (2) Plaintiff's claim only alleged that she obtained her mortgage loan from one of the Defendants, so the claim did not apply to the other Defendants. See ECF No. 12 at 9-10. Plaintiff's FAC does not correct the deficiencies in the Original Complaint.

TILA requires that lenders make certain disclosures to borrowers, which will give rise to a cause of action if the lender violates its disclosure requirements. See, e.g., 15 U.S.C. §§ 1601-1667f.

Further, TILA mandates that borrowers be given three business days to rescind, without penalty, a consumer loan that uses their principle dwelling as security. § 1635(a). If the lender has not complied with TILA's disclosure requirements, the rescission period is extended to three years. § 1635(f); see also Miguel v. Country Funding Corp., 309 F.3d 1161, 1164-65 (9th Cir. 2002) (upholding dismissal of a rescission claim under TILA where the three-year statute of limitations had expired).

Here, Plaintiff's TILA claim is brought against all Defendants, but she alleges that the mortgage loan was obtained from only one of the Defendants: Capitol Commerce Mortgage Co. Only the lender is obligated to comply with TILA's disclosure requirements, see e.g., 15 U.S.C. 1635, 1638, so Plaintiff's TILA claims against all the other Defendants are dismissed.

As to Defendant Capitol Commerce Mortgage Co., Plaintiff obtained the loan in 2003 and did not bring action until 2011, so she is approximately four years late in bringing her action under TILA's three-year statute of limitations. 15 U.S.C. ยง 1635(f). To escape the consequences of the statute of limitations, Plaintiff argues that equitable tolling should apply to permit her to bring her TILA claims ...


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