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Title: Robert Riggins v. Bank of America

January 24, 2013





Julie Barrera N/A

Courtroom Clerk Court Reporter



Before the Court is a Motion to Dismiss (the "Motion") filed by Defendants Bank of America, N.A., The Bank of New York Mellon, Mortgage Electronic Registration Systems, Inc., and ReconTrust Company, N.A. (collectively "Defendants"). Mot. (Dkt. 30). The court finds the matter appropriate for decision without oral argument. Fed R. Civ. P. 78; Local R. 7-15. After considering the moving, opposing, and replying papers, the Court GRANTS IN PART the Motion and DISMISSES certain claims WITH PREJUDICE, but also DENIES IN PART as to other claims.


A.Factual Background

Both the parties and the Court are familiar with the facts of this case after a prior Order granting a prior motion to dismiss. Order (Dkt. 26).

1.Loan Origination

As stated in the previous Order, Plaintiff Robert Riggins ("Plaintiff") entered into a loan agreement with Defendant Countrywide Home Loans, Inc. ("Countrywide") on December 21, 2006. Second Amended Compl. ("SAC") (Dkt. 27) at ¶ 18. Plaintiff executed an Adjustable Rate Note as part of a loan in the amount of $642,000 to purchase a property located at 409 Ford Road, Costa Mesa, CA 92627. Id. at ¶ 18, Ex. A. A deed of trust securing Plaintiff's loan was recorded naming Countrywide as the lender, Defendant ReconTrust Company ("ReconTrust") as the trustee, and Defendant Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary. Id. at ¶ 19, Ex. B. Defendant Bank of America, N.A. ("BANA") is the successor in interest to Countrywide. Id. at 5.

Plaintiff's loan application was completed via telephone. Id. at ¶ 122. During the loan application process, an interviewer employed by Countrywide briefly reviewed Plaintiff's financial information and made a recommendation to him with respect to the type of loans that would be offered by Countrywide. Id. at ¶ 20. Plaintiff alleges that when the loan application was filled out, Countrywide, through the interviewer acting as its agent, listed Plaintiff's "gross monthly income as $15,000" without Plaintiff's knowledge. Id. at ¶ 21. Plaintiff alleges that at the time the loan application was filled out, he "had little if any income at all." Id. Signed documents indicate that Plaintiff received the Deed of Trust, which included the terms of the loan, in December 2006. RJN (Dkt. 31) Ex. A. Plaintiff does not allege any facts indicating if he ever received the loan application which included the inflated monthly income and no signed loan application has been provided by either party.

2.Countrywide Enters Into a Stipulated Judgment in 2008

In October 2008, Countrywide agreed to a Stipulated Judgment with the Attorney General of the State of California. Id. at ¶ 24; Id. Ex H. The Stipulated Judgment dealt with certain home loans originated by Countrywide between 2003 and 2008. Id.

3.Notice of Default Filed in 2009

A Notice of Default was filed by ReconTrust on November 18, 2009. Id. at ¶ 42. Bank of New York was allegedly listed as the beneficiary. Id. at ¶ 41. The Notice of Default indicates that Plaintiff, as of November 13, 2009, was $119,706.49 in default. Id. Ex. F. Plaintiff includes no indication in his complaint that a foreclosure sale has taken place.

4.Countrywide's Assignment of Interest Not Recorded Until 2010

Soon after the loan agreement was signed in December 2006, Countrywide attempted to assign the beneficial interest in Plaintiff's note to a trust run by Defendant Bank of New York Mellon ("Bank of New York"). Id. at ¶¶ 37-38. However, an assignment of the interest was not recorded until 2010. Id. at ¶ 59.

Plaintiff alleges that the assignment of the interest was never properly recorded according to the Pooling and Servicing Agreement that governed the CWABS Asset-Backed Certificates Trust 2007-1 ("CWABS Trust"), which required that all assignments occur on or before February 9, 2007. Consequently, Plaintiff alleges that Bank of New York did not have a beneficial interest in the loan. Id. Plaintiff argues that BANA breached the terms of the loan agreement by enforcing the loan on behalf of Bank of New York when Bank of New York allegedly had no interest in the loan. Id. at ¶¶ 37-38, 59. Plaintiff further alleges that Defendants fraudulently fabricated and recorded documents with the County Recorder's Office to fill in missing gaps in the chain of title. Id. at ¶¶ 90, 100.

An assignment was recorded from MERS to Bank of New York on February 1, 2010. Id. at ¶ 39. Plaintiff alleges that he never received certain Truth in Lending Act ("TILA") disclosures detailing this assignment such as how to contact his new creditor or any other information regarding that creditor. Id. at ¶¶ 43, 73-75. Plaintiff alleges that he did not discover that there had been a potential TILA violation until November 2011, when he received a letter from BANA stating that his loan had been sold to Bank of New York. Id. at ¶ 76.

B.Procedural History

Plaintiff filed an initial Complaint on January 9, 2012. Compl. (Dkt.1). Plaintiff filed the First Amended Complaint ("FAC") on April 3, 2012. FAC (Dkt. 13). Defendants filed a Motion to Dismiss on April 23, 2012. Mot. (Dkt. 15).

This Court issued an Order granting in part and denying in part Defendants' Motion to Dismiss on July 18, 2012. Order (Dkt. 26). On July 26, 2012, Plaintiff filed the Second Amended Complaint ("SAC") alleging seven causes of action for: (1) fraud; (2) violations of the Truth in Lending Act; (3) violations of the California Business and Professions Code; (4) breach of fiduciary duty; (5) cancellation of a written instrument; (6) equitable estoppel; and (7) violation of a covenant of good faith and fair dealing. SAC (Dkt. 27).

Thereafter, Defendants filed the present Motion to Dismiss.

II.Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to set forth a set of facts which, if true, would entitle the complainant to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (holding that a claim must be facially plausible in order to survive a motion to dismiss). The pleadings must raise the right to relief beyond the speculative level; a plaintiff must provide "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(citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). On a motion to dismiss, this court accepts as true a plaintiff's well-pled factual allegations and construes all factual inferences in the light most favorable to the plaintiff. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The court is not required to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.

In evaluating a Rule 12(b)(6) motion, review is ordinarily limited to the contents of the complaint and material properly submitted with the complaint. Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir. 1994); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc.,896 F.2d 1542, 1555 n.19 (9th Cir. 1990). Under the incorporation by reference doctrine, the court may also consider documents "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading." Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by 307 F.3d 1119, 1121 (9th Cir. 2002).

A motion to dismiss under Rule 12(b)(6) can not be granted based upon an affirmative defense unless that "defense raises no disputed issues of fact." Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1984). For example, a motion to dismiss may be granted based on an affirmative defense where the allegations in a complaint are contradicted by matters properly subject to judicial notice. Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). In addition, a motion to dismiss may be granted based upon an affirmative defense where the complaint's allegations, with all inferences drawn in Plaintiff's favor, nonetheless show that the affirmative defense "is apparent on the face of the complaint." See Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 969 (9th Cir. 2010).

Additionally, Federal Rule of Evidence 201 allows the court to take judicial notice of certain items without converting the motion to dismiss into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). The court may take judicial notice of facts "not subject to reasonable dispute" because they are 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; see also Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (noting that the court may take judicial notice of undisputed "matters of public record"), overruled on other grounds by 307 F.3d 1119, 1125-26 (9th Cir. 2002). The court may disregard allegations in a complaint that are contradicted by matters properly subject to judicial notice. Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010).

Dismissal without leave to amend is appropriate only when the court is satisfied that the deficiencies in the complaint could not possibly be cured by amendment. Jackson v. Carey, 353 F.3d 750, 758 (9th Cir. 2003); Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (holding that dismissal with leave to amend should be granted even if no request to amend was made). Rule 15(a)(2) of the Federal Rules of Civil Procedure states that leave to amend should be freely given "when justice so requires." This policy is applied with "extreme liberality." Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990).

Federal Rule of Civil Procedure 9(b) states that an allegation of "fraud or mistake must state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). The "circumstances" required by Rule 9(b) are the "who, what, when, where, and how" of the fraudulent activity. Vess v. Ciba--Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003); Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir.1993) ("[Rule 9(b) requires] the times, dates, places, benefits received, and other details of the alleged fraudulent activity."). In addition, the allegation "must set forth what is false or misleading about a statement, and why it is false." Vess, 317 F.3d at 1106 (quoting In re Glenfed, Inc. Secs. Litig., 42 F.3d 1541, 1548 (9th Cir.1994)). Rule 9(b)'s heightened pleading standard applies not only to federal claims, but also to state law claims brought in federal court. Id. at 1103. This heightened pleading standard ensures that "allegations of fraud are specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir.1985).


In the SAC, Plaintiff asserts a total of seven causes of action. Defendants move to dismiss all except the violation of the Truth in Lending Act. The Court considers ...

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