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Racquel C. Benas and Benjie C. Benas v. Shea Mortgage Inc.; Ibm Lender Process

March 22, 2012

RACQUEL C. BENAS AND BENJIE C. BENAS, PLAINTIFFS,
v.
SHEA MORTGAGE INC.; IBM LENDER PROCESS SERVICES, INC.; CHASE HOME FINANCE, LLC; AND DOES
I - XX, INCLUSIVE,
DEFENDANTS.



The opinion of the court was delivered by: Irma E. GONZALEZUnited States District Judge

ORDER (1) GRANTING IN PART DEFENDANTS SHEA AND IBM/SETERUS'S MOTIONS TO DISMISS [Doc. Nos. 40, 45] (2) REMANDING STATE LAW CLAIMS (3) DENYING AS MOOT CHASE'S MOTION TO DISMISS [Doc. No. 38] (4) DENYING AS MOOT SHEA'S MOTION TO STRIKE BUSINESS [Doc. No. 44] (5) DENYING AS MOOT IBM/SETERUS'S MOTION TO DETERMINE THAT NO TRO IS IN EFFECT [Doc. No. 39]

Presently before the Court is three motions to dismiss Plaintiffs' first amended complaint ("FAC") brought by Defendants Shea Mortgage Inc. ("Shea"), IBM Lender Process Services, Inc. ("IBM/SETERUS"), and Chase Finance, LLC ("Chase") (collectively "Defendants"), [Doc. Nos. 38, 40, 45], and a motion to strike portions of Plaintiffs' complaint brought by Defendant Shea, [Doc. No. 44], and a motion to determine that no temporary restraining order ("TRO") is in effect brought by Defendant IBM/SETERUS. [Doc. No. 39.] For the reasons set forth below, the Court GRANTS IN PART Defendants Shea and IBM/SETERUS's motions to dismiss and DENIES AS MOOT Chase's motion to dismiss, Shea's motion to strike, and IBM/SETERUS's motion to determine that no TRO is in effect.

BACKGROUND

This is a mortgage case. Plaintiffs allege they purchased the subject property, located at 538 Trovita Court, Escondido, California, on March 13, 2008. [Doc. No. 37, FAC ¶¶ 1, 8.] To fund that purchase, Plaintiffs secured a loan for $417,000 from Defendant Shea Mortgage Inc. ("Shea"), secured by a Deed of Trust. [Id. ¶ 8.] On February 11, 2011, there was a notice of default on Plaintiffs' property, [id. ¶ 26], and on May 6, 2011, there was a notice of trustee's sale stating that the sale of Plaintiffs' property would take place on June 1, 2011. [Id. ¶ 33.]

On May 25, 2011, Plaintiffs filed the present action against Defendants Shea, IBM/SETERUS, and Chase in San Diego Superior Court alleging eleven causes of action. [Doc. No. 1-2, Compl.] Plaintiffs also filed on May 25, 2011 a motion for a temporary restraining order staying the foreclosure proceedings, which was granted by the state court on May 26, 2011. [Doc. Nos. 1-3, 1-4.] On July 1, 2011, Defendants removed the action from state court to this Court on the basis of federal question jurisdiction under 28 U.S.C. § 1331 and supplemental jurisdiction under 28 U.S.C. § 1367(a). [Doc. No. 1, Notice of Removal.]

Shortly after removing the action, all three Defendants moved to dismiss the complaint. [Doc. Nos. 2, 4, 14.] On October 4, 2011, the Court dismissed the complaint and gave Plaintiffs leave to file a first amended complaint ("FAC"). [Doc. No. 24.] On December 23, 2011, Plaintiffs filed a first amended complaint alleging seven causes of action for: (1) violation of the Real Estate Settlement and Procedures Act ("RESPA"), 12 U.S.C. § 2605(a); (2) violation of RESPA, 12 U.S.C. § 2605(e); (3) breach of fiduciary duties under California Civil Code §§ 2923.1 and 2079.24 and California Business and Professions Code § 10176; (4) constructive fraud under California Civil Code § 1573; (5) fraudulent concealment under California Civil Code §§ 1709- 1710; (6) negligent misrepresentation and concealment under California Civil Code §§ 1709-1710; and (7) violation of California Business and Professions Code § 17200. [FAC.] By the present motions, the Defendants seek to dismiss all the causes of action in Plaintiffs' FAC. [Doc. Nos. 38, 40, 45.] In addition, Shea moves to strike portions of the allegations related to Plaintiffs' claim for breach of fiduciary duty, [Doc. No. 44], and IBM/SETERUS moves for an order determining that there is no TRO in effect. [Doc. No. 39.]

DISCUSSION

I. Defendants' Motions to Dismiss

A. Legal Standards for a Motion to Dismiss

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a). 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 pleaded 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 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)) (alteration in original). A court need not accept "legal conclusions" as true. Iqbal, 129 S. Ct. at 1949. In spite of the deference the court is bound to pay to the plaintiff's allegations, it is not proper for the court to assume that "the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the . . . laws in ways that have not been alleged."

Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.'" Iqbal, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 557).

B. Plaintiffs' Federal Claims Under RESPA

Plaintiffs' FAC alleges two causes of action for violations of the Real Estate Settlement and Procedures Act ("RESPA")--one against Shea and one ...


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