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Nancy Tarsha v. Bank of America

March 29, 2013

NANCY TARSHA,
PLAINTIFF,
v.
BANK OF AMERICA, N.A.; [DOC. SYSTEMS, INC.; LANDSAFE, INC.; 25] RICARDO RODRIGUEZ, AN INDIVIDUAL; AND DOES 1-100 INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hon. Thomas J. Whelan United States District Judge

ORDER (1) GRANTING DEFENDANTS' REQUEST FOR JUDICIAL NOTICE [DOC. 25-2]; AND (2) GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S SECOND MORTGAGE ELECTRONIC AMENDED COMPLAINT

Pending before the Court is Defendants Bank of America, N.A., Mortgage Electronic Systems, Inc. ("MERS"), and Landsafe, Inc.'s motion to dismiss Plaintiff's Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(6).*fn1 (MTD [Doc. 25].)

Defendants also request judicial notice of nine documents attached to their motion. (Defs.' RJN [Doc. 25-2].) Plaintiff Nancy Tarsha opposes. (Pl.'s Opp'n [Doc. 27].)

The Court decides the matter on the papers submitted and without oral argument pursuant to Civil Local Rule 7.1(d)(1). For the reasons below, the Court GRANTS Defendants' request for judicial notice, and GRANTS Defendants' motion.

I. BACKGROUND

In 2000, Plaintiff Nancy Tarsha leased a parcel of property on Cox Road in San Marcos, California. (Second Amended Compl. "SAC" [Doc. 24] 5.) The lease gave Tarsha an option to purchase the property at the end of a three-year term. (Id.) A horse trainer by trade, Tarsha used the Cox Road property as a personal residence and a boarding facility for her horses. (Id.) In April 2004, Tarsha obtained a mortgage loan to purchase the Cox Road property for $1,250,000. (Id.)

In early 2005, Tarsha was approached by Defendant Ricardo Rodriguez, a home loan consultant for Countrywide Home Loans, Inc. ("Countrywide"),*fn2 about refinancing her mortgage on the Cox Road property. (Id.) Following Rodriguez's solicitation, Tarsha subdivided the Cox Road property into two parcels: 390 Cox Road and 424 Cox Road. (Id. at 5-7) Over the next year, Tarsha entered into seven different transactions with Countrywide, all executed by Rodriguez (collectively, "transactions"):

1. On April 27, 2005, Tarsha refinanced the 424 Cox Road parcel with a $608,000 adjustable-rate loan from Countrywide. (Id. at 5-6; SAC Exs. 1, 2.)

2. On May 27, 2005, Tarsha obtained a $55,000 line of credit on the 390 Cox Road parcel through Countrywide. (SAC 8.)

3. On May 31, 2005, Tarsha refinanced the 390 Cox Road parcel with a $825,000 jumbo loan from Countrywide. (SAC 7; SAC Ex. 3.)

4. On August 9, 2005, Tarsha refinanced the 424 Cox Road parcel, this time with a $610,000 loan from Countrywide. (SAC 9; SAC Ex. 5; Defs.' RJN Ex. F.) Countrywide's interest was secured by a deed of trust on the 424 Cox Road property, recorded August 16, 2005. (Id.)

5. On September 22, 2005, Tarsha obtained a $148,500 line of credit on the 424 Cox Road parcel through Countrywide. (SAC 11; Defs.' RJN Ex. G.) Countrywide's interest was again secured by a deed of trust on the property, recorded September 22, 2005. (Id.)

6. On December 22, 2005, Tarsha refinanced the 390 Cox Road parcel with a $910,000 adjustable-rate loan from Countrywide. (SAC 12; Defs.' RJN Ex. A.) Countrywide's interest was secured by a deed of trust on the property, recorded December 29, 2005. (Id.)

7. Finally, on January 30, 2006, Tarsha obtained a $188,500 line of credit on the 390 Cox Road parcel through Countrywide. (SAC 13; Defs.' RJN Ex. B.) Countrywide's interest was again secured by a deed of trust, recorded February 1, 2006. (Id.)

Tarsha maintains that each transaction above was procured by fraud on Rodriguez's part. (See SAC 5-12) For instance, Rodriguez repeatedly inflated Tarsha's income on loan and line-of-credit applications in order to secure approval. (Id.; SAC Exs. 1, 8, 13.) Rodriguez reported Tarsha's monthly income as $27,000, a figure that she contends she has never made. (SAC 7.) Tarsha also alleges that Rodriguez knowingly failed to document her extensive liabilities and inflated the value of her properties on certain loan applications. (Id.) Finally, Tarsha contends that Rodriguez consistently failed to provide her with disclosures required by federal law throughout the various transactions. (Id. at 5-12.)

Ultimately, Tarsha believes that Rodriguez induced her into repeated transactions for the sole purpose of generating fees for himself and other Countrywide affiliates, such as Landsafe. (See, e.g., id. at7-8.) Although Rodriguez assured Tarsha that refinancing would help her stay in her home, each transaction only made her worse off: she incurred substantial pre-payment penalties with each refinance, she received no cash payouts as a result of the refinance and line-of-credit transactions, her total indebtedness to Countrywide increased with each transaction, and the term of her indebtedness was only extended further into the future. (Id. at 5-12.)

In early 2008, Tarsha defaulted on her 424 Cox Road mortgage (transaction four above). (SAC 22.) Recontrust, the trustee identified on each deed of trust executed on behalf of Countrywide, recorded a notice of default and election to sell on May 27, 2008. (Defs.' RJN Ex. H.) On September 3, 2008, Recontrust recorded a notice of trustee's sale on the 424 Cox Road property. (Defs.' RJN Ex. I.) Soon after, Tarsha also defaulted on her 390 Cox Road mortgage (transaction six above). (Defs.' RJN Ex. D.) On February 20, 2009, Recontrust recorded a notice of default for that property as well. (Id.) Tarsha entered into Chapter 13 bankruptcy protection in August 2010, and was discharged on March 9, 2011. (SAC 15.) Tarsha filed her instant action in this Court on April 30, 2011. (See Compl. [Doc. 1].)

On February 10, 2012, Tarsha filed her FAC in the instant case. (See FAC.) Tarsha asserted ten causes of action: (1) fraud - intentional misrepresentation; (2) fraud - negligent misrepresentation; (3) breach of fiduciary duty; (4) violation of the Truth in Lending Act ("TILA"); (5) violation of the Real Estate Settlement Procedures Act ("RESPA"); (6) violation of the Fair Debt Collection Practices Act ("FDCPA") and California's Rosenthal Fair Debt Collection Practices Act ("Rosenthal Act"); (7) violation of California's Unfair Competition Law ("UCL"); (8) breach of implied covenant of good faith and fair dealing; (9) wrongful foreclosure; and (10) quiet title. (Id.) Tarsha also sought equitable tolling on the applicable statutes of limitation and requests arbitration/mediation of her substantive claims. (Id. at 33-36, 39.) Defendants moved to dismiss each of Tarsha's claims. (See Mot. Dismiss FAC [Doc 18].)

On June 28, 2012, the Court granted in part and denied in part Defendants motion to dismiss the FAC, and granted Tarsha leave to amend. (See Order [Doc. 23].) On August 8, 2012, Tarsha filed her Second Amended Complaint asserting the same causes of action listed above. (See SAC [Doc. 24].) Defendants again move to dismiss each of Tarsha's claims. (See MTD.)

II. LEGAL STANDARD

Courts must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Balisteri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). In ruling on the motion, a court must "accept all material allegations of fact as true and construe the complaint in a light most favorable to the non-moving party." Vasquez v. L.A. Cnty., 487 F.3d 1246, 1249 (9th Cir. 2007).

However, the courts are not "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007). Instead, the allegations in the complaint must "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) (citing Twombly, 550 U.S. at 570). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id.

Generally, courts may not consider material outside the complaint when ruling on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, courts may consider documents specifically identified in the complaint whose authenticity is not questioned by parties. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superceded by statutes on other grounds). Moreover, courts may consider the full text of those documents, even when the complaint quotes only selected portions. Id. Courts may also consider material properly subject to judicial notice without converting the motion into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994) (citing Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), abrogated on other grounds by Astoria Fed. Sav. and Loan Ass'n v. Solimino, 501 U.S. 104 (1991)).

III. DISCUSSION

A. Defendants' Requests for ...


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