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Velasco v. Homewide Lending Corp.

United States District Court, Ninth Circuit

June 21, 2013



CORMAC J. CARNEY, District Judge.


On May 2, 2013, pro se Plaintiff Nelson Velasco filed this action relating to the property located at 5043 Evergreen Ave in Cypress, California ("the Property"). Mr. Velasco brings claims against Homewide Lending Corp. ("Homewide"), Aurora Loans Services, LLC ("Aurora"), Nationstar Mortgage, LLC ("Nationstar"), and Mortgage Electronic Registration Systems, Inc. (collectively, "Defendants"). Mr. Velasco alleges that on November 15, 2006, he executed an adjustable rate note in the amount of $600, 000 before a representative of Homewide in order to purchase the Property. (Dkt. No. 1 ["Compl."] at 5.) Mr. Velasco attempted to contact "Defendants" in November 2009 regarding a modification of the loan terms. ( Id. ) Defendants, however, allegedly ignored his correspondences and requests to modify his loan. ( Id. at 2.) Instead, Defendants foreclosed on the property and sold it at a trustee sale held on November 14, 2011. ( Id. ) Mr. Velasco alleges ten causes of action against Defendants: (1) fraud and misrepresentation under the Truth in Lending Act ("TILA"), (2) violation of the Real Estate Settlement Procedures Act ("RESPA"), (3) violation of the California Rosenthal Fair Debt Collection Practices Act ("Rosenthal Act"), (4) quiet title, (5) wrongful foreclosure, (6) slander of title, (7) fraud, (8) civil conspiracy, (9) constructive trust, and (10) unfair business practices under the California Business & Professions Code section 17200 ("UCL").[1] ( See Compl.) On May 7, 2013, the Court issued an Order to Show Cause ("OSC") why the case should not be dismissed for failure to state a claim. (Dkt. No. 8.) On May 21, 2013, Mr. Velasco filed a largely non-responsive opposition to the OSC. (Dkt. No. 7.) Among other things, he asserts that the United States is in Chapter 11 reorganization and lacking the solvency to pay its debt, and that all financial institutions are under the control of the International Monetary Fund. ( Id. ¶¶ 9, 14.) He barely mentions the allegations in the Complaint, and provides no explanation as to why his Complaint states a claim for relief. Defendants filed a reply in support of the OSC on May 28, 2013. (Dkt. No. 8.) Based on the parties' responses to the Court's OSC and for the reasons stated below, the Court DISMISSES the Complaint for failure to state a claim upon which relief can be granted.


Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. In considering whether to dismiss a case for failure to state a claim, the issue before the Court is not whether the claimant will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims asserted. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997). When evaluating a Rule 12(b)(6) motion, the district court must accept all material allegations in the complaint as true and construe them in the light most favorable to the non-moving party. Moyo v. Gomez, 32 F.3d 1382, 1384 (9th Cir. 1994). However, a court may consider extrinsic evidence to evaluate a motion to dismiss without converting it into a motion for summary judgment if such evidence may be judicially noticed. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only a short and plain statement of the claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2). Additionally, plaintiffs alleging fraud or mistake must "state with particularity the circumstances constituting fraud or mistake, " Fed.R.Civ.P. 9(b), including the "the time, place and specific content of the false representations as well as the parties to the misrepresentations." Alan Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393 (9th Cir. 1986)).

Dismissal of a complaint for failure to state a claim is not proper where a plaintiff has alleged "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although the district court should grant the plaintiff leave to amend if the complaint can possibly be cured by additional factual allegations, Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995), the district court need not grant leave to amend if amendment of the complaint would be futile. See Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1051-52 (9th Cir. 2008) (finding that amendment would be futile where plaintiff was granted leave to amend once and the amended complaint contained the same defects as the prior complaint). The Court addresses each of Plaintiffs' causes of action in turn.

A. Fraud and Misrepresentation under TILA

Mr. Velasco alleges that Defendants violated TILA, but points to no specific provisions of the law that were violated. As a result, he has failed to put Defendants on notice of the claims against them, making his allegations insufficient under Rule 8. Regardless, any potential TILA claims are likely time-barred. TILA permits injured plaintiffs to seek damages or rescission. An individual must bring claims for damages within one year of the violation, 15 U.S.C. § 1640(e), and the right to rescind "expire[s] three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, " 15 U.S.C. § 1635(f). Mr. Velasco did not file this action until more than three years after the consummation of the loan. Additionally, Mr. Velasco has not demonstrated that the Court should equitably toll the damages statute of limitations. "Equitable tolling may be applied if, despite all due diligence, a plaintiff is unable to obtain vital information bearing on the existence of [her] claim." Santa Maria v. P. Bell, 202 F.3d 1170, 1178 (9th Cir. 2000). Mr. Velasco alleges no facts in the Complaint or in his opposition to the OSC to suggest that he could not have discovered the alleged TILA violations by exercising reasonable diligence. His claims are therefore bared by the statute of limitations.

B. RESPA Violations

Mr. Velasco alleges that Defendants violated RESPA § 2605(e) by failing to respond to his request for a loan modification and by failing to comply with disclosure requirements at the closing of the sale of the Property. With respect to the disclosure at the time of sale, Mr. Velasco does not allege which disclosure requirements Defendants violated. As a result, he has failed to put Defendants on notice of the claims against them, as required by Rule 8(a).

With respect to the loan modification request allegations, Mr. Velasco fails to allege that he suffered any actual damages as the result of the RESPA violations. See 12 U.S.C. § 2605(f); Long v. Deutsche Bank Nat'l Trust Co., No. 10-00359 JMS/KSC, 2011 U.S. Dist. LEXIS 122617, at *12 ("Because damages are a necessary element of a RESPA claim, failure to plead damages is fatal to a RESPA claim."). Mr. Velasco pleads no facts creating a causal connection between Defendants' alleged failure to respond to the loan modification requests and his damages. For example, he does not claim that he was eligible for a loan modification, or that he was capable of making payments on a modified loan. Moreover, Mr. Velasco fails to allege that he is entitled to statutory damages because he does not adequately plead a "pattern or practice" of RESPA violations. See RESPA § 2605(f)(1)(B). Instead, he asserts in wholly conclusory fashion that he "is informed and believes... that Defendants have engaged in a pattern or practice of non-compliance requirements of... RESPA." (Compl. at 9.) This "formulaic recitation of the elements of a cause of action" is not sufficient to state a claim for relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

C. Violations of the Rosenthal Act

Mr. Velasco alleges that Defendants violated the Rosenthal Act by "foreclosing upon a void security interest; foreclosing upon a note of which they were not in possession...; falsely stating the amount of the debt; increasing the amount of the debt by including amounts that are not permitted by law...; and using unfair and unconscionable means in an attempt to collect the debt." (Compl. at 9.) Mr. Velasco provides no factual allegations in support of these claims. For example, he fails to allege when or how Defendants falsely stated the amount of the debt. Moreover, "a loan servicer is not a debt collector under [the Rosenthal Act]." Lal v. Am. Home Servicing, Inc., 680 F.Supp.2d 1218, 1224 (E.D. Cal. 2010); see Sipe v. Countrywide Bank, 690 F.Supp.2d 1141, 1151 (E.D. Cal. 2010) ("[F]oreclosure pursuant to a deed of trust does not constitute debt collection under the [Rosenthal Act]."); see Gardner v. Am. Home Mortg. Servicing, Inc., 691 F.Supp.2d 1192, 1199 (E.D. Cal. 2010) ("[T]o the extent Plaintiff's Rosenthal Act claims against ...

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