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Stavrinides v. Bell Home Loans, Inc.

United States District Court, N.D. California

April 2, 2014



MAXINE M. CHESNEY, District Judge.

Before the Court is defendants OneWest Bank, FSB ("OneWest") and Mortgage Electronic Registration Systems, Inc. ("MERS") Motion to Dismiss Plaintiffs' First Amended Complaint ("FAC"), filed February 18, 2014. Plaintiffs Elias and Kristi Stavrinides have filed opposition, to which OneWest and MERS have replied. Having read and considered the papers filed in support of and in opposition to the motions, the Court deems the matters suitable for determination on the parties' respective written submissions, VACATES the hearing scheduled for April 4, 2014, and rules as follows.


On March 3, 2014, plaintiffs obtained a mortgage loan from Bell Home Loans, Inc. ("Bell"), which was secured by a Deed of Trust ("DOT") encumbering their home in Rohnert Park, California. (See FAC ¶¶ 6, 28.) The DOT names Bell as the lender, North Bay Title as the Trustee, and MERS as the beneficiary. (See id. at 28; see also Defendants' Request for Judicial Notice ("RJN") at Ex. 1.) Thereafter, plaintiffs allege, the "loan was made into a security" when it was sold to the IndyMac Trust 2005-AR8 pursuant to a Pooling and Servicing Agreement ("PSA"). (FAC ¶¶ 19, 29.)

On October 13, 2010, MERS executed an Assignment of Deed of Trust ("ADOT"), which was recorded on October 22, 2010, and by which MERS conveyed all beneficial interest under the DOT to OneWest. (See FAC Ex. A.) On July 16, 2012, OneWest executed a Substitution of Trustee ("SOT") that named Meridian Foreclosure Service ("Meridian") as Trustee. (See RJN at Ex. 2.) On August 7, 2012, Meridian, acting as an agent for the beneficiary, executed a Notice of Default ("NOD"). (See RJN at Ex. 3; see also FAC ¶ 114.) A Notice of Trustee's Sale was recorded on November 13, 2012, and the property was foreclosed upon and a Trustee's Deed Upon Sale was recorded on December 10, 2012. (See RJN at Exs. 4-5; see also FAC ¶ 80.)

On December 3, 2012, plaintiffs filed the instant action in state court, and on February 6, 2014, OneWest and MERS removed the case to federal court. By their FAC, plaintiffs bring causes of action under the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2614, as well as various state law causes of action.


I. Federal Causes of Action

A. Fifth and Seventh Causes of Action

The Fifth Cause of Action alleges a violation of TILA, 15 U.S.C. § 1601 et seq., which statute requires, inter alia, that certain disclosures be made by creditors "[f]or each consumer credit transaction other than under an open end credit plan." See 15 U.S.C. § 1638(a). The Seventh Cause of Action, "Recission [sic], " alleges plaintiffs are "entitled to rescind the loan" based, in pertinent part, upon said violation. (See FAC ¶ 136.) OneWest and MERS argue plaintiffs' claims are barred by the statute of limitations. Plaintiffs do not address this argument in their opposition.

Plaintiffs' TILA claim is based on an allegation that OneWest and MERS "fail[ed] to provide [plaintiffs] with accurate material disclosures required under TILA, " which, according to plaintiffs, required said defendants to "fully inform home buyers of the pros and cons of adjustable rate mortgages" and to "advise them to compare similar loan products with other lenders." (See FAC ¶ 122.) A claim for damages based on a failure to disclose as required by TILA must be brought "within one year from the date of the occurrence of the violation, " see 15 U.S.C. § 1640(e), and the one-year limitations period "runs from the date of consummation of the transaction, " King v. State of California , 784 F.2d 910. 915 (9th Cir. 1986). A claim for rescission under TILA must be made within "three years [of] the date of consummation of the transaction." See 15 U.S.C. § 1635(f). Here, as noted, plaintiffs allege they entered into the consumer credit transaction at issue "[o]n or about March 3, 2005" (see FAC ¶ 28), and, as noted, their initial complaint was not filed until December 3, 2012.

Although plaintiffs allege that "[a]ny and all statutes of limitations relating to disclosures and notices required pursuant to 15 U.S.C. § 1601, et seq. were tolled due to [d]efendants' failure to effectively provide the required disclosures and notices" (see FAC ¶ 123 (internal alteration omitted)), the FAC, as OneWest and MERS correctly point out, contains no facts demonstrating when plaintiffs discovered the alleged lack of required disclosures or any facts demonstrating why they could not have discovered such failure to disclose at an earlier time. See Meyer v. Ameriquest Mortg. Co. , 342 F.3d 899, 902 (9th Cir. 2003) (holding, absent showing of undisclosed credit terms or fraudulent concealment that prevented them from discovering claim, plaintiffs were not entitled to equitable tolling because they were in "full possession of all information relevant to the discovery of a TILA violation and... damages claim on the day the loan papers were signed"); Hubbard v. Fid. Fed. Bank , 91 F.3d 75, 79 (9th Cir. 1996) (holding plaintiffs were not entitled to equitable tolling because "nothing prevented [them] from comparing the loan contract, [defendant's] initial disclosures, and TILA's statutory and regulatory requirements").

Accordingly, the Fifth Cause of Action and, to the extent it is based on a violation of TILA, the Seventh Cause of Action will be dismissed with leave to amend to cure the above-noted deficiency. In addition, plaintiffs must identify in any such amended causes of action the particular information allegedly not disclosed and the section of the statute requiring such disclosure, see Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (holding complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face"), and, further, must specify the particular conduct on which each individual defendant's liability is alleged to be based, see, e.g., Romero v. Countrywide Bank, N.A. , 740 F.Supp.2d 1129, ...

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