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Linda M. Chavers v. Gmac Mortgage

June 20, 2012

LINDA M. CHAVERS, PLAINTIFFS,
v.
GMAC MORTGAGE, LLC FKA GMAC MORTGAGE CORPORATION, A DELAWARE CORPORATION; MORTGAGE ELECTRONIC REGISTRATION A.K.A. MERS, A DELAWARE CORPORATION; DIRECT FUNDING, A CALIFORNIA CORPORATION; FIDELITY NATIONAL TITLE, A BUSINESS ORGANIZATION FORM UNKNOWN; EXECUTIVE TRUSTEE SERVICES, LLC DBA ETS SERVICES, LLC AS TRUSTEE, A DELAWARE CORPORATION; AND ALL PERSONS UNKNOWN, CLAIMING ANY LEGAL OR EQUITABLE RIGHT, TITLE, ESTATE, LIEN, OR INTEREST IN THE PROPERTY DESCRIBED IN THE COMPLAINT ADVERSE TO PLAINTIFF'S TITLE, OR ANY CLOUD ON PLAINTIFF'S TITLE THERETO; AND DOES 1 THROUGH 100, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hon. Otis D. Wright, II United States District Judge

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS [56] [Filed 04/12/12]

I.INTRODUCTION

Before the Court is Defendants GMAC Mortgage, LLC, ("GMAC") Mortgage Electronic Registration Systems, Inc. ("MERS") and Executive Trustee Services, LLC's ("ETS") (collectively "Defendants") Motion to Dismiss Plaintiff Linda M. Chavers's Third Amended Complaint ("TAC").*fn1 (ECF No. 56.) For the following reasons, Defendants' Motion to Dismiss is GRANTED in part and DENIED in part.

II.FACTUAL AND PROCEDURAL BACKGROUND

This case arises from a mortgage loan Plaintiff obtained from Direct Funding ("Direct") on March 17, 2006, in the amount of $399,000.00 (the "Subject Loan").*fn2

(TAC ¶ 24.) A Deed of Trust naming Direct as beneficiary of the Subject Property located at 1226 Westcove Place, West Covina, California 91790 secured the note. (TAC ¶ 1.) On October 16, 2006, a Corporation Assignment of Deed of Trust was recorded with the Los Angeles County Recorder's Office ("LACRO"), which assigned beneficial interest in the Deed of Trust to MERS.(Def.'s Request for Judicial Notice ("RJN"), Ex. B.)*fn3 On January 18, 2007, a Substitution of Trustee was recorded with LACRO, substituting ETS as the trustee of the Deed of Trust. (Def.'s RJN, Ex. C.)

On September 7, 2007, Plaintiff filed a voluntary petition for Chapter 13 bankruptcy in the U.S. Bankruptcy Court, Central District of California. In re: Linda M. Chavers, No. 2:07-BK-17893-SK (Bankr. C.D. Cal.). (TAC ¶ 38.) Plaintiff alleges she and the bankruptcy trustee were making payments throughout the bankruptcy process for several months leading up to the foreclosure sale, and "GMAC failed to properly account for such payments and instead knowingly and falsely represented to" Plaintiff, MERS, and the bankruptcy court that Plaintiff "missed payments."*fn4 (TAC ¶ 74.) Plaintiff further contends she and others relied on this misrepresentation, and that MERS used these "false accountings" to file "a Motion to Lift the Automatic Stay with the bankruptcy court." Id. Such motion was granted, Plaintiff avers, because both GMAC and MERS misled the court. (TAC ¶ 75.)

As of January 9, 2009, Plaintiff was allegedly in default by $21,600.97. (Def.'s RJN, Ex. D.) As a result, ETS recorded a Notice of Default and Election to Sell Under Deed of Trust. Id. ETS then recorded a Notice of Trustee's Sale on April 14, 2009. (Def.'s RJN, Ex. E.) On January 21, 2010, GMAC obtained title to the Subject Property from the foreclosure sale for the purchase price of $414,000.00 (Def.s' RJN, Ex. F), despite Plaintiff's contention that she was not in default. (TAC¶ 74.)

Pursuant to the Court's March 9, 2012 Order granting Defendants' previous motion to dismiss with leave to amend, Plaintiff filed her TAC on March 23, 2012. (ECF Nos. 48, 50.) Defendants filed the instant Motion on April 12, 2012, and Plaintiff filed her Opposition on April 24, 2012. (ECF Nos. 56, 58.) Defendants filed their Reply on April 27, 2012. (ECF No. 60.) The Court has carefully considered both Defendants' and Plaintiff's papers and will address the merits without oral argument.*fn5 See Fed. R. Civ. P. 78; C.D. Cal. L. R. 7--15. The Court notes, however, that its last order directed Plaintiff to eliminate from her lengthy pleadings any generalized or sensationalized characterizations of the mortgage industry not directly related to the facts constituting Plaintiff's claims against Defendants. (ECF No. 48.) The Court also admonished Defendants to specificallytailor to Plaintiff's TAC any subsequent motion to dismiss and to avoid mere regurgitations of previously filed motions. Id. On the whole, it appears that both parties have only halfheartedly complied with this directive. To the extent that the parties ignored the Court's admonition, the Court will not consider those arguments it deems unnecessarily repetitive.

Plaintiff's TAC alleges seven claims: (1) fraud; (2) violation of California's Unfair Competition Law ("UCL") under California Business and Professions Code section 17200; (3) financial elder and dependent adult abuse ("FEDAA") under California Welfare and Institutions Code section 15600 et seq.; (4) violation of the Fair Housing Act ("FHA") under 42 U.S.C. § 3601 et seq.; (5) violation of the Equal Credit Opportunity Act ("ECOA") under 15 U.S.C. § 1691 et seq.; (6) violation of the Civil Rights Act ("CRA") under 42 U.S.C. § 1981 et seq.; and (7) quiet title. (ECF No. 50.) Defendants now move to dismiss the entire TAC. (ECF No. 56.) The Court addresses Defendants' arguments and the sufficiency of Plaintiff's claims below.

III.LEGAL STANDARD

Dismissal under Rule 12(b)(6) can be based on "the lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)-a short and plain statement-to survive a motion to dismiss for failure to state a claim under Rule 12(b)(6). Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003); Fed. R. Civ. P. 8(a)(2). For a complaint to sufficiently state a claim, its "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While specific facts are not necessary so long as the complaint gives the defendant fair notice of the claim and the grounds upon which the claim rests, a complaint must nevertheless "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Iqbal's plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Rule 8 demands more than a complaint that is merely consistent with a defendant's liability-labels and conclusions, or formulaic recitals of the elements of a cause of action do not suffice. Id. The determination whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

When considering a Rule 12(b)(6) motion, a court is generally limited to the pleadings and must construe "[a]ll factual allegations set forth in the complaint . . . as true and . . . in the light most favorable to [the plaintiff]." Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). Conclusory allegations, unwarranted deductions of fact, and unreasonable inferences need not be blindly accepted as true by the court. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Yet, a complaint should be dismissed only if "it appears beyond doubt that the plaintiff can prove no set of facts" supporting plaintiff's claim for relief. Morley v. Walker, 175 F.3d 756, 759 (9th Cir. 1999).

As a general rule, leave to amend a complaint that has been dismissed should be freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir.1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).

IV.DISCUSSION

The Court begins its analysis by addressing Plaintiff's first claim for fraud. The Court then considers the UCL claim. The Court turns next to Plaintiff's FEDAA claim, followed by combined analysis of her claims for violation of the FHA, ECOA, and CRA. ...


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