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Marina Weahunt v. California Reconveyance Company


May 4, 2012


The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge


This purported diversity action, originally filed on August 27, 2010,*fn1 was referred to the undersigned pursuant to E.D. Cal. L.R. 302(c)(21). Plaintiff has paid the filing fee and is proceeding pro se with her original complaint.

Currently pending before the court is defendant California Reconveyance Company's ("CRC") motion to dismiss plaintiff's complaint pursuant to Fed. R. Civ. P. 12(b)(6). (Dkt. No. 27.) Plaintiff filed an opposition to the motion. (Dkt. No. 32.)*fn2 Subsequently, the motion was submitted on the record without oral argument. (Dkt. No. 34.) After considering the papers in support of and in opposition to the motion, the court's record in this matter, and the applicable law, the court now FINDS AS FOLLOWS:


The background facts are taken from the operative complaint, unless otherwise noted. On December 1, 2006, plaintiff executed a promissory note in the amount of $417,000.00 secured by a deed of trust on her real property at 4321 Palacio Way, Fair Oaks, California 95628. (See Complaint, Dkt. No. 1 ["Compl."] at 1; Defendant's Request for Judicial Notice, Dkt. No. 28 ["RJN"], Ex. A.)*fn3 The deed of trust identifies Marina L. Weahunt as the borrower; Washington Mutual Bank as the lender; and CRC as the trustee. (RJN, Ex. A.) The loan was subsequently assigned, and when plaintiff defaulted on the loan, CRC, upon instruction of the beneficiary at the time, JP Morgan Chase Bank, recorded a Notice of Default and Election to Sell Under Deed of Trust on May 5, 2010. (RJN, Ex. B.) When the default was not cured, CRC recorded a Notice of Trustee's Sale on August 9, 2010, noticing the sale for August 30, 2010. (RJN, Ex. C.)

Thereafter, on August 27, 2010, plaintiff commenced this action and filed motions for a temporary restraining order ("TRO") and preliminary injunction to prevent foreclosure. (Dkt. Nos. 1-3.) That same day, the district judge issued a minute order directing plaintiff to comply with the requirements of E.D. Cal. L.R. 231. (Dkt. No. 7.) When plaintiff failed to do so, the motion for a TRO was denied as procedurally defective, and the motion for a preliminary injunction was stricken as procedurally defective. (Dkt. Nos. 8, 9.) Subsequently, on March 4, 2011, the subject property was sold at a trustee's sale to the foreclosing beneficiary, JP Morgan Chase Bank, and a Trustee's Deed Upon Sale was recorded on March 11, 2011. (RJN, Ex. D.)

The allegations in plaintiff's complaint are vague and at times confusing. However, it appears that plaintiff alleges various irregularities and fraudulent activities involved in the loan origination process. For example, plaintiff alleges that various "defendants" failed to provide her with proper and timely notices and disclosures prior to closing; disregarded and deviated from proper underwriting standards; created a condition of stress to induce her to sign documents at closing that she did not read and fully understand; maliciously induced her to enter into a predatory loan agreement, which they knew she could not afford; provided a property appraisal with a falsely stated price; charged false fees at settlement; and used the false fees to compensate plaintiff's agents to induce them to breach their fiduciary duty to plaintiff.

Although plaintiff makes somewhat different allegations regarding unidentified lender(s), agent(s), appraiser(s), trustee(s), and sometimes the "defendants" collectively, she contends that they are all liable for the acts of their co-conspirators based on their involvement in a fraudulent scheme. Plaintiff claims that, as a result of the above-mentioned violations, the mortgage transaction is null and void. Plaintiff further alleges that "defendants" lacked standing to pursue foreclosure proceedings, because they failed to produce the original note and document the chain of custody of the deed of trust. She requests rescission of the loan contract, quiet title to the property, injunctive relief, and monetary damages, along with attorneys' fees and costs.

Even though plaintiff's causes of action are scattered throughout the complaint, the complaint, liberally construed, purports to state federal causes of action for violations of the Truth In Lending Act ("TILA"); the Home Ownership and Equity Protection Act ("HOEPA"); the Real Estate Settlement Procedures Act ("RESPA"); and 15 U.S.C. § 45 et seq. (the Federal Trade Commission Act). It also contains various state law causes of action, including quiet title, unjust enrichment, fraud, breach of fiduciary duty, negligence, negligence per se, breach of the implied covenant of good faith and fair dealing, and intentional infliction of emotional distress.

Plaintiff does not specify the basis for this court's subject matter jurisdiction over the action. Both plaintiff and CRC appear to be citizens of California,*fn4 thereby defeating diversity jurisdiction. However, because plaintiff's complaint includes federal claims, the court will construe the complaint as invoking the court's federal question jurisdiction pursuant to 28 U.S.C. § 1331.


In considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted, the court must accept as true the allegations of the complaint in question, Erickson v. Pardus, 551 U.S. 89, 94 (2007), and construe the pleading in the light most favorable to the plaintiff, see Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). However, to avoid dismissal for failure to state a claim, a complaint must contain more than "naked assertions," "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-57 (2007). In other words, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). Furthermore, a claim upon which the court can grant relief must have facial plausibility. Twombly, 550 U.S. at 570. "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." Iqbal, 129 S. Ct. at 1949.

Federal Pleading Standards

Fed. R. Civ. P. 8(a)(2) provides that a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief...." As an initial matter, the court agrees with CRC that plaintiff's complaint does not comply with federal pleading standards. A substantial portion of the complaint essentially involves an indictment of the real estate and mortgage banking industry. Other portions of the complaint appear to have been copied and pasted from briefs in other cases, given that it contains references to a motion to dismiss and entities not even involved in the loan transaction at issue, such as a loan servicer named EMS. (See Compl. at 23, 28.)

Furthermore, the complaint involves a significant amount of impermissible shotgun pleading. "Shotgun pleadings are pleadings that overwhelm defendants with an unclear mass of allegations and make it difficult or impossible for defendants to make informed responses to the plaintiff's allegations." See Sollberger v. Wachovia Securities, LLC, 2010 WL 2674456, at *4 (C.D. Cal. Jun. 30, 2010); see also McHenry v. Renne, 84 F.3d 1172, 1179 (9th Cir. 1996) (holding that "[p]rolix, confusing complaints...impose unfair burdens on litigants and judges.") Although CRC is the only named defendant, plaintiff alleges a variety of conduct attributed to various unidentified persons and entities, which she refers to collectively with CRC as "defendants." The complaint fails to clearly identify what conduct is alleged as to CRC specifically. Plaintiff also includes, scattered throughout the complaint, references to a large number of statutes that were allegedly violated without pleading the elements of the asserted causes of action or factual allegations in support of those elements.

Thus, plaintiff's complaint does not contain "a short and plain statement of the claim" as required by Fed. R. Civ. P. 8(a)(2). At the very least, dismissal with leave to amend would be warranted on this basis. Nevertheless, in the interests of judicial efficiency and because the court concludes that dismissal is warranted for more substantive reasons, the court proceeds to an analysis of plaintiff's claims pursuant to Fed. R. Civ. P. 12(b)(6).

Federal Causes of Action

As noted above, plaintiff's complaint purports to state federal causes of action for violations of TILA, HOEPA, RESPA, and the Federal Trade Commission Act. In her opposition to the instant motion, plaintiff also suggests for the first time that she has a claim against CRC for violation of the federal Fair Debt Collection Practices Act ("FDCPA"). However, for the reasons discussed below, plaintiff fails to state a claim upon which relief can be granted under any of these statutes.


Any claim against CRC premised on alleged violations of TILA fails because CRC is merely a trustee under the Deed of Trust. The only entities that can be liable for TILA violations are the original creditor and assignees of that creditor. See 15 U.S.C. § 1640 ("With respect to any failure to make disclosures...liability shall be imposed only upon the creditor required to make disclosure"); 15 U.S.C. § 1641 ("any civil action for a violation...which may be brought against a creditor may be maintained against any assignee of such creditor only if the apparent on the face of the disclosure statement"). CRC, as trustee under the Deed of Trust, is neither a creditor nor an assignee of the creditor. See Hargis v. Washington Mut. Bank, 2011 WL 724390, at *2 (N.D. Cal. Feb. 22, 2011); Vogan v. Wells Fargo Bank, 2011 WL 5826016, at *4 (E.D. Cal. Nov. 17, 2011) (noting that TILA does not apply to the trustee of a deed of trust due to the trustee's limited role and lack of beneficial interest under California law); Guerrero v. Citi Residential Lending, Inc., 2009 WL 926973, at *4 (E.D. Cal. Apr. 3, 2009) (accord).

"HOEPA is an amendment to TILA, designed to 'combat predatory lending,' which applies only to certain high cost loans." Pedersen v. Greenpoint Mortg'g Funding, Inc., 2011 WL 3818560, at *5 (E.D. Cal. Aug. 29, 2011) (citing In re First Alliance Mortg'g Co., 471 F.3d 977, 984 n.1 (9th Cir. 2006)). Again, because CRC is not a creditor, it can have no liability under HOEPA. See e.g. Bonner v. Redwood Mortg'g Corp., 2010 WL 1267069, at *4 (N.D. Cal. Mar. 29, 2010); Castro v. Executive Trustee Services, LLC, 2009 WL 438683, at *8 (D. Ariz. Feb. 23, 2009).

Additionally, it appears that plaintiff's claims under TILA and HOEPA are time barred. Under 15 U.S.C. § 1635(f), "[a]n obligor's right of rescission shall expire three years after the date of consummation of the transaction...." "Consummation means the time that a consumer becomes contractually obligated on a credit transaction." 12 C.F.R. § 226.2(a)(13); see also King v. State of California, 784 F.2d 910, 913 (9th Cir. 1986) (holding that TILA claim for rescission of home loan was barred by the three-year absolute limitation on rescission actions set out in 15 U.S.C. § 1635(f)). Under 15 U.S.C. § 1640(e), if the borrower seeks damages based on TILA and HOEPA violations, she must file her action within one year. Pedersen, 2011 WL 3818560, at *5. The limitations period for purposes of 15 U.S.C. § 1640(e) also runs from the date of consummation of the transaction. King, 784 F.2d at 915. Here, plaintiff executed the note secured by the deed of trust on December 1, 2006 and did not bring the instant action until August 27, 2010. Accordingly, plaintiff's rescission and damages claims under TILA and HOEPA are time barred.

Furthermore, the doctrine of equitable tolling does not save plaintiff's claims here. First, the three-year limitations period for rescission is absolute and not subject to equitable tolling. King, 784 F.2d at 913; Miguel v. Country Funding Corp., 309 F.3d 1161, 1164 (9th Cir. 2002). Second, although it is true that, for damages claims under 15 U.S.C. § 1640(e), "equitable tolling may, in the appropriate circumstances, suspend the limitations period until the borrower discovers or had reasonable opportunity to discover the fraud or nondisclosures," King, 784 F.2d at 915, plaintiff fails to allege any facts supporting the application of equitable tolling in this case. Apart from the alleged nondisclosures themselves and plaintiff's contentions that she trusted "defendants" as professionals, plaintiff does not allege any affirmative steps of concealment. Nothing prevented plaintiff from comparing the loan documentation with TILA and HOEPA's requirements. See Hubbard v. Fidelity Federal Bank, 91 F.3d 75, 79 (9th Cir. 1996) ("nothing prevented Hubbard from comparing the loan contract, Fidelity's initial disclosures, and TILA's statutory and regulatory requirements"). In any event, even if plaintiff could successfully invoke equitable tolling, her TILA and HOEPA claims are fatally flawed for the other reasons discussed above.

Therefore, plaintiff's TILA and HOEPA claims should be dismissed. Because these claims cannot be cured by further amendment, they should be dismissed with prejudice.


Any RESPA claim against CRC is also devoid of merit. RESPA requires that borrowers be provided with a standard disclosure form at or before the "settlement" of a mortgage loan transaction. 12 U.S.C. § 2603. Additionally, RESPA prohibits the receipt of kickbacks and referral fees in connection with a mortgage loan transaction. 12 U.S.C. § 2607. RESPA also requires that lenders and loan servicers make certain disclosures and communications to the borrower regarding the servicing of a mortgage loan. 12 U.S.C. § 2605.

Plaintiff's allegations regarding lack of disclosures prior to closing, as well as false settlement fees and kickbacks, plainly do not relate to CRC, because as the trustee under the deed of trust, CRC had no involvement in the origination of the loan. Also, there is no private right of action for violations of 12 U.S.C. § 2603's requirements. Lingad v. Indymac Federal Bank, 682 F. Supp. 2d 1142, 1151 (E.D. Cal. 2010); Bloom v. Martin, 865 F. Supp. 1377, 1384 (N.D. Cal. 1994). Furthermore, because CRC is not a lender or loan servicer, it can also have no liability under 12 U.S.C. § 2605. See Lingad, 682 F. Supp. 2d at 1151 ("Without alleging that MortgageIT was a lender or loan servicer for the purposes of Section 2605, Plaintiff's claim cannot survive MortgageIT's dismissal motion.") Moreover, any RESPA violation is barred by the applicable statute of limitations. 12 U.S.C. § 2614 (specifying that 3-year and 1-year limitation periods apply to actions under sections 2605 and 2607 respectively). As noted above, plaintiff has failed to plead any facts suggesting that equitable tolling is appropriate.

Therefore, plaintiff's RESPA claim should also be dismissed. As further amendment would be futile, the claim should be dismissed with prejudice.

Federal Trade Commission Act

Plaintiff alleges, in conclusory fashion, that "[i]n the manner in which Defendants have carried on their business enterprises, they have engaged in a variety of unfair and unlawful business practices prohibited by 15 USC Section 45 et seq. (Deceptive Practices Act). Such conduct comprises a pattern of business activity within the meaning of such statutes, and has directly and proximately caused Petitioner to suffer economic and non-economic harm and detriment...." (Compl. at 17-18.)

"Section 5 of the [Federal Trade Commission Act] prohibits 'unfair or deceptive acts or practices in or affecting commerce.'" F.T.C. v. Medicor LLC, 217 F. Supp. 2d 1048, 1053 (C.D. Cal. 2002) (citing 15 U.S.C. § 45(a)(1)). However, the Federal Trade Commission Act does not provide individuals with a private cause of action. See Carlson v. Coca-Cola Co., 483 F.2d 279, 280 (9th Cir. 1973); Gomez v. Wachovia Mortg'g Corp., 2010 WL 291817, at *5 (N.D. Cal. Jan. 19, 2010). Accordingly, this claim should also be dismissed with prejudice.


In her opposition to the instant motion, plaintiff contends that she has a claim for violation of the federal FDCPA against CRC. She states that, on February 13, 2010, she sent a letter to "Defendant" demanding that it validate the debt and its standing to collect the debt from plaintiff. She claims that "Defendant" failed to validate the debt and was therefore estopped from further collection. Nevertheless, "Defendant" made demand on plaintiff for payment of the alleged debt and prosecuted the foreclosure action in violation of the FDCPA. She further states that "Defendant" used false, deceptive, and misleading representations or means to collect the alleged debt by misrepresenting the character, amount, and legal status of the debt and by threatening to take action against plaintiff that could not legally be taken.

"The FDCPA was enacted to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." Izenberg v. ETS Services, LLC, 589 F. Supp. 2d 1193, 1198 (C.D. Cal. 2008). "As a threshold matter, liability cannot attach under the FDCPA unless the defendant is a debt collector, trying to collect a debt." Gonzalez v. CNA Foreclosure Service, Inc., 2011 WL 2580681, at *2 (S.D. Cal. Jun. 29, 2011).

Here, plaintiff fails to show that CRC was a debt collector trying to collect a debt for purposes of the FDCPA. As an initial matter, the above-referenced February 13, 2010 letter requesting validation of the debt, attached to the opposition as Exhibit A, is in fact a notice that plaintiff sent to JPMorgan Chase Bank, the beneficiary of the deed of trust at the time of the foreclosure. Additionally, the "demand" made on plaintiff, attached to the opposition as Exhibit B, is a copy of the Notice of Trustee's Sale recorded by CRC. Therefore, the only purported "debt collection" activities at issue are the steps CRC took to complete the non-judicial foreclosure process, i.e. recording the notice of default and the notice of sale, and conducting the trustee sale. As one federal district court in California recently observed:

While the Ninth Circuit Court of Appeals has held that providing notice of a pending foreclosure sale is not a debt collection activity under the FDCPA, Santoro v. CTC Foreclosure Serv., 12 Fed. App'x 476, 480 (9th Cir. 2001), it has yet to decide whether the act of foreclosing pursuant to a deed of trust is a form of debt collection. Other circuit courts have reached diverging opinions about the applicability of the FDCPA in the foreclosure context. Compare Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985), reh'g granted in part and denied in part, 761 F.2d 237 (5th Cir. 1985) (holding that mortgagees are not debt collectors under the FDCPA) with Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373, 376-377 (4th Cir. 2006) (holding that a trustee sale is a debt collection under the FDCPA). District courts in the Ninth Circuit have generally concluded that "foreclosing on a property pursuant to a deed of trust is not a debt collection within the meaning of the [Rosenthal Fair Debt Collection Practices Act] or the FDC[P]A." Gamboa v. Trustee Corps., 2009 WL 656285 at *4 (N.D. Cal.); Landayan v. Washington Mut. Bank, 2009 WL 3047238 at *3 (N.D. Cal.) (dismissing plaintiff's FDCPA claim because "foreclosing on a deed of trust does not invoke the statutory protections of the FDCPA"); Jozinovich v. JP Morgan Chase Bank, N.A., 2010 WL 234895 at *6 (N.D. Cal.); Izenberg v. ETS Servs., LLC, 589 F. Supp. 2d 1193, 1199 (C.D. Cal. 2008); Ines v. Countrywide Home Loans, Inc., 2008 WL 4791863 at *2 (S.D. Cal.); Hulse v. Ocwen Fed. Bank, FSB, 195 F. Supp. 2d 1188, 1204 (D. Or. 2002) ("Foreclosing on a trust deed is distinct from the collection of the obligation to pay money.").

Garfinkle v. JPMorgan Chase Bank, 2011 WL 3157157, at *3 (N.D. Cal. Jul. 26, 2011). The Garfinkle court concluded that neither notice of a trustee's sale nor the sale itself falls within the scope of the FDCPA. Id.

This court agrees with Garfinkle and the vast majority of other California federal district courts that foreclosure on a property pursuant to a deed of trust is not debt collection for purposes of the FDCPA. See also Salazar v. Trustee Corps, 2009 WL 690185, at *6 (S.D. Cal. Mar. 12, 2009); Gonzalez, 2011 WL 2580681, at **3-5. As another court explained:

Foreclosing on a trust deed is distinct from the collection of the obligation to pay money. The FDCPA is intended to curtail objectionable acts occurring in the process of collecting funds from a debtor. But, foreclosing on a trust deed is an entirely different path. Payment of funds is not the object of the foreclosure action. Rather, the lender is foreclosing its interest in the property.... Foreclosure by the trustee is not the enforcement of the obligation because it is not an attempt to collect funds from the debtor.

Quintero Family Trust v. Onewest Bank, 2010 WL 2618729, at *4 (S.D. Cal. June 25, 2010). Plaintiff's reliance on case law to the contrary outside the Ninth Circuit and California is not persuasive, especially given the limited authority that a trustee under a deed of trust has under California law. See Heritage Oaks Partners v. First American Title Ins. Co., 155 Cal. App. 4th 339, 345 (2007) (holding that the trustee's "only duties are: (1) upon default to undertake the steps necessary to foreclose the deed of trust; or (2) upon satisfaction of the secured debt to reconvey the deed of trust.").

In this case, CRC, pursuant to the request of the beneficiary of the deed of trust, performed its duties under the deed of trust and the applicable California statutes by recording the notice of default and the notice of sale, and conducting the trustee sale. There is no indication that it otherwise collected money or attempted to collect money from plaintiff. As such, CRC was not a debt collector attempting to collect a debt for purposes of the FDCPA. Accordingly, leave to amend plaintiff's complaint to add a FDCPA claim would be futile.


Plaintiff suggests throughout the complaint that all "defendants" are liable for the acts of their co-conspirators based on their involvement in a fraudulent scheme. However, there are no facts pled even remotely suggesting that CRC had any involvement in the origination or servicing of the loan, nor that there was an agreement between CRC and any other person to violate plaintiff's federal rights. Thus, to the extent that plaintiff suggests that CRC is somehow liable under any of the above-mentioned federal statutes based on the actions of other unidentified persons, that argument is patently frivolous.

State Law Causes of Action

As there are no federal claims remaining, this court declines to exercise supplemental jurisdiction over plaintiff's possible state law claims. See 28 U.S.C. § 1367(c)(3) ("The district courts may decline to exercise supplemental jurisdiction over a claim...if -- the district court has dismissed all claims over which it has original jurisdiction"); see also Acri v. Varian Associates, Inc., 114 F.3d 999, 1000-01 (9th Cir. 1997) (" 'in the usual case in which all federal-law claims are eliminated before trial, the balance of factors . . . will point toward declining to exercise jurisdiction over the remaining state-law claims' "), quoting Carnegie-Mellon University v. Cohill, 484 U.S. 343, 350 n.7 (1988). Here, given that the only federal claims have dropped out in the pleadings stage of the litigation, dismissal of the state law claims without prejudice is appropriate.


Accordingly, for the reasons outlined above, IT IS HEREBY RECOMMENDED that:

1. CRC's motion to dismiss (dkt. no. 27) be granted;

2. Plaintiff's causes of action for violations of TILA, HOEPA, RESPA, and the Federal Trade Commission Act, 15 U.S.C. § 45 et seq. be dismissed with prejudice;

3. Plaintiff's remaining state law causes of action be dismissed without prejudice;

4. Judgment be entered for CRC; and

5. The Clerk of Court be directed to close this case.

These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen

(14) days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Any reply to the objections shall be served and filed within seven (7) days after service of the objections. The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

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