The opinion of the court was delivered by: Hon. Anthony J. Battaglia U.S. District Judge
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS; GRANTING DEFENDANT'S MOTION TO STRIKE; GRANTING PLAINTIFF'S AND DEFENDANT'S REQUEST FOR JUDICIAL NOTICE (Doc. Nos. 8, 9, 8-2, 11-1.)
Plaintiff Bryan Vess filed a purported class action complaint against Defendant Bank of America ("BANA") for improperly reducing or suspending credit limits on home equity lines of credit ("HELOCs") in violation of the Truth in Lending Act ("TILA") and its implementing regulation, Regulation Z, 12 C.F.R. § 226 and other state law claims. Defendant filed a motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff filed an opposition and Defendant filed a reply. The motion is submitted on the papers without oral argument, pursuant to Civil Local Rule 7.1(d)(1). After a review of the briefs, supporting documentation, and applicable law, the Court GRANTS in part and DENIES in part Defendant's motion to dismiss. The Court also GRANTS Defendant's motion to strike; and GRANTS Plaintiff's and Defendant's request for judicial notice.
On April 29, 2010, Plaintiff filed a class action complaint for violation of TILA and its implementing regulation, Regulation Z. (Dkt. No. 1.) Plaintiff also allege breach of contract; and violations under California Business & Professions Code section 17200. (Id.) On July 13, 2010, Defendant filed a motion to dismiss the complaint and a motion to strike allegations regarding Doe Defendants. (Dkt. Nos. 8, 9.) On August 30, 2010, Plaintiff filed an opposition to both motions. (Dkt. Nos. 10, 11.) On September 3, 2010, Defendant filed a reply. (Dkt. Nos. 12, 13.) On November 18, 2010, Defendant filed a supplemental notice of new case law in support of its motion to dismiss the complaint. (Dkt. No. 16.) On March 25, 2011, the case was transferred to the undersigned judge. On June 22, 2011, Defendant filed a second supplemental notice of new case law in support of its motion to dismiss the complaint. (Dkt. No. 19.) On July 13, 2011, Plaintiff filed a supplemental notice of new case law in support of its opposition to Defendant's motion to dismiss the complaint. (Dkt. No. 21.)
According to the Complaint, Bank of America, formerly known as Countrywide Financial Group, originates, secures and owns billions of dollars worth of prime and subprime mortgages, including home equity lines of credit ("HELOC"). (Compl. ¶¶ 1-2.) Plaintiff alleges that Defendant illegally and improperly reduced or suspended credit limits on HELOCs without justification across the country in order to limit its exposure to the risk of collapse in the United States housing market and to rid itself of below-market interest rate loans. (Id.)
Plaintiff bought his home for $600,000. (Id. ¶ 14.) He took out a first mortgage for $480,000 and a HELOC for $60,000 on his home through Defendant. (Id.) After 2003, Plaintiff maintained a zero balance on the HELOC. (Id.)
According to the HELOC agreement and in the disclosure entitled "IMPORTANT TERMS OF OUR HOME EQUITY LINE OF CREDIT", BANA can reduce or suspend the HELOC when "the value of the Property declines significantly below its appraised value for the purposes of my Account."*fn1 (Dkt. No. 8-3, D's Request for Judicial Notice, Ex. A, ¶ 11.A.(1); see also D's Request for Judicial Notice, Ex. B, p. 1.)
"At a later point in time, and unaware of the letter that Defendant claims it sent, Plaintiff contacted Defendant to inquire about the status of his HELOC." (Id. ¶ 16.) He was informed that he could not draw any money from the HELOC and Defendant had used an automated valuation model ("AVM") to determine the value of his home. (Id.) Defendant claimed it had sent a letter notifying Plaintiff about the suspension but it could not find the letter it claims to have sent. (Id.)
Plaintiff's communications with Defendant's representatives revealed that in January 2008, Defendant mailed Plaintiff a letter notifying that it had suspended Plaintiff's HELOC from future draws effective immediately. (Id. ¶ 15.) The letter apparently stated that the suspension was due to the fact that home values were declining and that the value of Plaintiff's home had significantly declined. (Id.) Defendant was not sure whether the letter stated what the supposed declined value was, how Defendant determined the alleged decline, what the initial home value at the HELOC origination was, and what value was needed to reinstate the HELOC. (Id.)
Plaintiff alleges that Defendant's suspension of his HELOC was based on a geographic area survey covering home values in the area where Plaintiff's home was located and not on an actual assessment of Plaintiff's home value. (Id. ¶ 17.) Plaintiff claims he suffered damages from being denied access to the $60,000 HELOC and from enjoying the benefits of his contractual relationship with Defendant. (Id. ¶ 18.) Plaintiff alleges that he agreed to pay an annual fee in return for access to the $60,000 HELOC. (Id.) In addition, the line of credit eliminated the credit Plaintiff had available to him and drove up his Credit Utilization rate and damaged his credit rating and increased the cost of credit to him. (Id. ¶ 19.) In addition, Defendant's acts eliminated Plaintiff's access to credit when he needed money which increased the opportunity costs of Plaintiff's spending. (Id.)
A. Request for Judicial Notice
Bank of America requests that the Court take judicial notice of three documents: (1) "Home Equity Credit Line Agreement and Disclosure Statement" between Plaintiff and Defendant executed around July 20, 2003; (2) "Important Terms of our Home Equity Line of Credit" disclosure between Plaintiff and Defendant executed around July 20, 2003; (3) Order Granting in Part and Denying in Part Defendant's Motion to Dismiss Certain Claims and to Strike Certain Allegations in the United States District Court for the Northern District of Illinois in Hickman v. Wells Fargo Bank, N.A., on May 11, 2010. (Dkt. No. 8-2.)
In addition, Vess requests that the Court take judicial notice of six documents: (1) FDIC financial institutional letter, Home Equity Lines of Credit Consumer Protection and Risk Management Considerations When Changing Credit Limits and Suggested Best Practices, FDIC FIL-58-2008, June 26, 2008, 2008WL 2552743; (2) In re Citibank HELOC Reduction Litigation, 09cv350-MMC (N.D. Cal. Sept. 17, 2009); (3) Hickman v. Wells Fargo Bank, N.A., 683 F. Supp. 2d 779 (N.D. Ill. Jan. 26, 2010); (4) Wilder v. JP Morgan Chase Bank, N.A., et. al., No. 8:90cv834-DDOC-RNG (C.D. Cal. Mar. 11, 2010), slip opinion; (5) Kimball v. Washington Mutual Bank, et al., No. 09cv1261 MMA-AJB (S.D. Cal. Apr. 5, 2010), slip opinion, and (6) Wilder v. JP Morgan Chase Bank, N.A., et al., No. 8:90cv834-DDOC-RNG (C.D. Cal. Nov. 25, 2010), slip opinion. (Dkt. No. 11-1.)
A court may take judicial notice of a fact "not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201. Pleadings and other court filings are the proper subject of judicial notice and may be considered on a motion to dismiss. Mullis v. U.S. Bankr. Ct. for Dist. of Nev., 828 F.2d 1385, 1388 & n.9 (9th Cir. 1987). Since the parties have not disputed the taking of judicial notice of these documents, and the documents are subject to judicial notice, the Court GRANTS Defendant's and Plaintiff's requests for judicial notice.
B. Legal Standard Pursuant to Federal Rule of Civil Procedure 12(b)(6)
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). 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). A complaint may survive a motion to dismiss only if, taking all well-pleaded factual allegations as true, it contains enough facts to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009) (quoting 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." Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. "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). In reviewing a Rule 12(b)(6) motion, the Court accepts as true all facts alleged in the complaint, and draws all reasonable inferences in favor of the plaintiff. alKidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009).
Defendant argues that claims one and two for violation of the TILA and Regulation Z are not timely because Plaintiff filed a complaint on April 29, 2010, over one year past the date of the alleged violation of January 2008. In opposition, Plaintiff argues that he contacted Defendant sometime after April 29, 2009 inquiring about his HELOC and that is when he learned that the suspension occurred sometime in January 2008.
A TILA cause of action must "be brought in any United States district court . . . within one year from the date of the occurrence of the violation." 15 U.S.C. § 1640(e). Under federal statute of limitations, the statue of limitations begins to run "when the claimant discovers, or in the exercise of reasonable diligence should have discovered, the acts constituted the alleged (violation)." NLRB v. DonBurgess Const. Corp., 596 F.2d 378, 382 (9th Cir. 1979).
The complaint in this case was filed on April 29, 2010. Plaintiff alleges that he contacted Bank of America sometime after April 29, 2009 inquiring about his HELOC. However, the Complaint does not provide a date as to when Plaintiff learned about the suspension. The complaint provides the following conclusory statement: "[a]t a later point in time . . . Plaintiff contacted Defendant to inquire about the status of his HELOC" and "Plaintiff did not discover Defendant's actions as alleged herein until within one year of the filing of this Complaint." (Compl. ¶¶ 16, 21.) It also states that in January 2008, Defendant claims it mailed Plaintiff a letter informing him about the suspension. (Id. ¶ 15.) The Complaint provides no specific date when Plaintiff learned about the suspension of his HELOC. It only states that in January 2008, Defendant allegedly mailed a letter indicating that it had suspended Plaintiff's HELOC. (Id.) Based on the only listed date in the Complaint of January 2008, the Court concludes that the Complaint is untimely.
Accordingly, the Court GRANTS Defendant's motion to dismiss claims one and two alleging violations of TILA and Regulation Z as untimely. The Court GRANTS Plaintiff leave to amend the Complaint to specifically allege when he discovered the alleged TILA violation.
Assuming that Plaintiff can cure the timeliness defect based on the arguments in his opposition, the Court addresses the remaining ...