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Maria Flora Urbano, An Individual v. Bank of America

January 28, 2013

MARIA FLORA URBANO, AN INDIVIDUAL PLAINTIFF,
v.
BANK OF AMERICA, N.A., SUCCESSOR IN INTEREST TO COUNTRYWIDE BANK, A N.A.; RECONTRUST COMPANY, N.A., A WHOLLY-OWNED SUBSIDIARY OF BANK OF AMERICA, N.A.; AND ALL PERSONS OR ENTITIES UNKNOWN CLAIMING ANY LEGAL OR EQUITABLE RIGHT, TITLE, ESTATE, LIEN OR INTEREST IN THE PROPERTY DESCRIBED IN THIS COMPLAINT ADVERSE TO PLAINTIFF'S TITLE THERETO, AND DOES 1 THROUGH 25, INCLUSIVE,
DEFENDANTS.



ORDER ON DEFENDANTS' MOTION TO STRIKE AND MOTION DISMISS SECOND AMENDED COMPLAINT (Doc. No. 20, 21)

INTRODUCTION

This case arises out of a mortgage loan transaction. Plaintiff Maria Flora Urbano ("Plaintiff") brings suit against Defendants Bank of America, N.A., as successor by merger to Countrywide Bank FSB, erroneously sued as Bank of America, N.A., successor in interest to Countrywide Bank, N.A. ("BANA"); and ReconTrust Company, N.A., a wholly owned subsidiary of Bank of America, N.A. ("ReconTrust") (collectively, "Defendants"). On July 18, 2012, the Court granted Defendants' motion to dismiss Plaintiff's First Amended Complaint ("FAC"). See Court's Docket, Doc. No. 17. On August 7, 2012, Plaintiff filed a Second Amended Complaint ("SAC") alleging causes of action for: (1) fraud in origination of loan; (2) set aside pending trustee sale based upon wrongful foreclosure in violation of California Civil Code § 2923.5; (3) violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601, et seq. ("RESPA"); (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; (6) violation of the Truth in Lending Act, 15 U.S.C. § 1601, et seq. ("TILA"); (7) rescission; (8) predatory lending in violation of California Business & Professions Code § 17200; (9) unfair and deceptive business practices in violation of California Civil Code § 1920(a) and § 1921(b); ( 10) negligence; (11) declaratory relief; and (12) quiet title. See id., Doc. No. 18. Defendants now move to dismiss and to strike portions of the Second Amended Complaint. See id., Doc. Nos. 20, 21. For the reasons stated herein, Defendants' motion to strike shall be granted, and the motion to dismiss shall be granted in part and denied in part.

ALLEGED FACTS*fn1

Plaintiff obtained an Option Adjustable Rate Mortgage loan from Countrywide Bank*fn2 in the amount of $693,500 to finance the purchase of residential property located at 2202 E. Hogan Avenue, Fresno, CA, 93720. See SAC ¶ 27. The loan was secured by a Deed of Trust ("DOT") which was recorded in Fresno County on August 12, 2005. See SAC, Ex A; RJN, Ex. A. The DOT provides that upon breach of the loan agreement, the lender can give notice to accelerate. Id. Plaintiff alleges she informed a loan agent from Countrywide Bank that her monthly income was approximately $9,000 per month. SAC ¶ 29. Plaintiff further alleges that "[f]rom the time the loan application began through the time of the loan closing, Plaintiff was never given the opportunity to review the loan application. In addition, she was never informed of the contents that [Countrywide] Agent placed therein." SAC ¶ 30. At the time of the loan closing, Plaintiff alleges the following facts were not disclosed to her:

a. The monthly payment on the Loan could increase after one (1) year and would dramatically increase after five (5) years because of the increase in the interest rate and the negative amortization component of the loan;

b. Plaintiff qualified for the Loan in the amount of $632,000.00 because her income was inflated and falsified in the Application;

c. The ARM interest rate could increase to 9.95%; d. There was a Prepayment Penalty described in an addendum, which stated that within twelve (12) months after the execution of the Note, if Plaintiff made prepayment(s), exceeding twenty percent (20%) of the original Principal amount of the Note, Plaintiff would have to pay a Prepayment Penalty in an amount equal to the payment of six (6) months' advance interest on the amount by which her prepayment(s) during the twelve (12) month period immediately preceding the date of the prepayment exceeded twenty percent (20%) of the original principal amount of the Note. Interest would be calculated using the rate in effect at the time of prepayment;

e. Agent received a commission of $14,226.75 for closing the Loan through a "Lock in Agreement";

f. Plaintiff had the right to rescind the Loan within 3 days of signing.

Id. ¶ 33. It was not until Plaintiff attempted to modify her loan that she discovered the loan application had falsely stated her monthly income was $10,675, with additional income stated under "other" as $4,292.00. Id.

In or about February 2008, Plaintiff became ill and was placed on restricted duty at work for the next two and a half years. Id. ¶ 35. In or about September 2008, Plaintiff could no longer make her loan payments and requested assistance from BANA for a loan modification. Id. ¶ 36. Although BANA officials told her they were unable to offer her any loan workout options, Plaintiff applied for a loan modification through the Homes Affordable Modification Program ("HAMP"). Id. ¶¶ 36-37. That loan modification application was denied because Plaintiff made too much money. Id. ¶ 37. In or about early 2009, Plaintiff applied for an in-house loan modification, which was also denied because she made too much money. Id. ¶ 38. Later in 2009, Plaintiff sought the assistance of a third-party company to obtain a loan modification. Id. ¶ 39. The third-party company contacted BANA, and Plaintiff was offered a three month trial modification. Id. After making the payments under the trial modification for six months, Plaintiff was informed that the trial period had ended and her payments would return to their original amount. Id. Plaintiff then sought the assistance of a non-profit organization, but after five to seven months of resubmitting documents and negotiation, Plaintiff was again denied a loan modification. Id. ¶ 40.

On January 20, 2011, ReconTrust recorded and sent a Notice of Default to Plaintiff informing her that she was $53,584.97 in default. Id. ¶ 31; RJN, Ex. B. On August 2, 2011, ReconTrust recorded a Notice of Trustee Sale under the DOT.SAC ¶ 42; RJN, Ex. C. In or about November 2011, Plaintiff hired another third-party company to assist her in obtaining a loan modification through HAMP. Id. ¶ 43. Per the Notice of Trustee Sale, the original sale date was set for August 24, 2011, but was subsequently postponed to November 7, 2011. Id. ¶ 100; RJN, Ex. C. On November 7, 2011, Plaintiff filed for Chapter 13 bankruptcy protection in the United States Bankruptcy Court for the Eastern District of California. See RJN, Ex. D. On February 17, 2012, Plaintiff's Chapter 13 matter was dismissed without entry of discharge. Id., Ex. E. The November 7, 2011 sale date was cancelled, but Plaintiff alleges BANA is still in the process of foreclosing. SAC ¶ 100.

LEGAL STANDARD

A. Motion to Dismiss

Under Federal Rule of Civil Procedure 12(b)(6),a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). 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)(2). Where the plaintiff fails to allege "enough facts to state a claim to relief that is plausible on its face," the complaint may be dismissed for failure to allege facts sufficient to state a claim upon which relief may be granted. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007); see Fed. R. Civ. P. 12(b)(6). "A claim has facial plausibility," and thus survives a motion to dismiss, "when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868 (2009). On a Rule 12(b)(6) motion to dismiss, the court accepts all material facts alleged in the complaint as true and construes them in the light most favorable to the plaintiff. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). However, the court need not accept conclusory allegations, allegations contradicted by exhibits attached to the complaint or matters properly subject to judicial notice, unwarranted deductions of fact or unreasonable inferences. Daniels--Hall v. National Educ. Ass'n, 629 F.3d 992, 998 (9th Cir.2010). "Dismissal with prejudice and without leave to amend is not appropriate unless it is clear . . . the complaint could not be saved by amendment." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

B. Motion to Strike

Rule 12(f) of the Federal Rules of Civil Procedure allows the court to "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." The purpose of a Rule 12(f) motion is to avoid the costs that arise from litigating spurious issues by dispensing with those issues prior to trial. Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir.1983). Immaterial matter is defined as matter that "has no essential or important relationship to the claim for relief or the defenses being pleaded." Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir 1993) (quoting 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure ยง 1382, at 706-07 (1990)), rev'd on other grounds, 510 U.S. 517 (1994). Impertinent matter is defined as "statements that do not pertain, and are not necessary, to the issues in question." Fantasy, Inc. 984 F.2d at 1527. "Motions to strike are generally viewed with disfavor, and will usually be denied unless the allegations in the pleading have no possible relation to the controversy, and may cause prejudice to one of the parties." Lindblom v. Secretary of Army, No. 2:06-cv-2280-GEB-GGH, 2007 WL 1378019, *1 (E.D.Cal. May 10, 2007) (quoting Campbell v. PricewaterhouseCoopers, LLP, No. CIV. S-06-2376 ...


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