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Canas v. Citimortgage, Inc.

United States District Court, Ninth Circuit

July 2, 2013



DAVID O. CARTER, District Judge.


Before the Court is Defendant Citimortgage's ("Defendant's") Motion to Dismiss (Dkt. 5).[1] After reviewing the motion, opposition, and reply, the Court herby GRANTS IN PART AND DENIES IN PART Defendant's Motion to Dismiss.[2]

I. Background

The facts alleged by Alejandro and Sylvia Canas ("Plaintiffs") are as follows:

a. The Loan

On March 8, 2005, Plaintiffs executed a $632, 000 loan from Defendant secured by a deed of trust against the subject property. Compl. ¶¶ 9-10. Defendant's loan representative rushed Plaintiffs through signing so that Plaintiffs were deprived of an opportunity to carefully read the loan documents. Id. ¶ 10. During this process, Defendant's loan representatives assured Plaintiffs that they would receive a fully amortized prime rate loan. Id. ¶¶ 9-10. Instead, Defendant put Plaintiffs in a sub-prime loan with higher loan payments. Id. ¶¶ 11-12.

b. Loan Modification

Due to these higher payments, Plaintiffs sought a loan modification from Defendant in March 2010. Id. ¶ 12. Plaintiffs complied with instructions to submit loan modification applications. Id. However, Defendant's representatives falsely claimed that they had lost or never received such documents and required Plaintiffs to resubmit applications. Id. ¶¶ 12, 15. Defendant set short expiration dates for submitted documents, thus requiring Plaintiffs to continuously resubmit. Id. ¶ 15. Defendant's loan representative told Plaintiffs that Defendant would give them a temporary workout agreement in which Plaintiffs had to make three modified payments for three consecutive months. Id. ¶ 12. If Plaintiffs successfully made these payments in a timely manner, Defendant's representative assured, Plaintiff's loan modification would be permanent and Defendant would stop pursuing foreclosure. Id. Plaintiffs successfully made the three modified payments. Id. ¶ 14. Defendant then told Plaintiffs that they would not even be considered for a permanent modification. Id.

On June 15, 2012, Cal-Western, acting as Defendant's agent, recorded a Notice of Default indicating incorrect arrearages of $106, 439.13. On September 27, 2012, Cal-Western recorded a Notice of Trustee Sale, which indicated an incorrect unpaid balance of $757, 598.67.

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 ...

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