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Flores v. Greenpoint Mortgage Funding, Inc.

United States District Court, N.D. California

April 7, 2017



          NATHANAEL M. COUSINS United States Magistrate Judge.

         Pro se plaintiff Benito Flores sued various entities[1] connected with his 2005 home mortgage. Flores alleges defendants lack standing to foreclose, intentional infliction of emotional distress (IIED), quiet title, fraud in the concealment, fraud in the inducement, slander of title, declaratory relief, violations of the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA), and rescission. Dkt. No. 1-1. Defendants filed motions to dismiss. Dkt. Nos. 11, 27. Flores did not rebut defendants' arguments for dismissal in his opposition brief. Because the Court finds Flores lacks standing to bring his claims, failed to state a claim, and that his claims are time-barred, the Court DISMISSES Flores' complaint in its entirety. However, with respect to the claims for wrongful foreclosure and declaratory relief only, the Court DISMISSES those claims WITH LEAVE TO AMEND. All of Flores' other claims are DISMISSED WITH PREJUDICE.

         I. BACKGROUND

         On November 17, 2005, Benito Flores and his wife Maria Flores, as borrowers signed a deed of trust for a property on Langley Canyon Road in Salinas, California. Dkt. No. 3-1.[2] The promissory note on this transaction was for $583, 200. Id. at 2. The lender on this transaction was defendant GreenPoint Mortgage Funding, Inc., and the beneficiary was defendant Mortgage Electronic Registration System, Inc. (MERS). Id. The deed of trust was assigned twice. First, on March 27, 2009 from MERS to Greenpoint Mortgage Funding, Inc. Dkt. No. 12-2. Second, on November 21, 2013, Greenpoint assigned the deed of trust to HSBC Bank USA, National Association. Dkt. No. 12-3.

         After the second assignment, Flores' loan was “securitized, ” and Flores contends it was not properly transferred to the Series 2006-AF1 Trust. Dkt. No. 1-1 at 11. Flores alleges numerous vaguely stated violations to the trust's Pooling and Servicing Agreement and in the securitization process. Id. at 11-15.

         On October 30, 2015, Western Progressive, LCC, apparently as agent for HSBC under the deed of trust, filed with the Monterey County Recorder a Notice of Default and Election to Sell Under Deed of Trust. Dkt. No. 3-2. The amount owed on the mortgage at that time was $282, 659.21. Id. at 2.

         Flores filed his complaint in Monterey County Superior Court on October 31, 2016, and defendant HSBC removed the case to federal court on January 5, 2017. Dkt. Nos. 1, 1-1. Defendants HSBC and Greenpoint filed motions to dismiss Flores' complaint. Dkt. Nos. 11, 27. All parties consented to the jurisdiction of a magistrate judge under 28 U.S.C. § 636(c). Dkt. Nos. 8, 9, 10, 13, 19, 26.


         A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). On a motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the non-movant. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). The Court, however, need not accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). Although a complaint need not allege detailed factual allegations, it must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).


         A. Claims Arising From Origination.

         Flores alleges[3] claims arising from the origination of his loan for violations of (1) RESPA, (2) TILA, (3) rescission, (4) fraud in the inducement, and (5) fraud in the concealment. The first three claims are time-barred, and the fraud claims are insufficiently pled.

         First, Flores' claims under RESPA, TILA, and for rescission are time-barred. “If a lender fails to disclose material information required by TILA, a borrower has a right to rescind within three years of consummation of the loan. . . . In addition, a borrower has a right to monetary damages within one year of consummation of the loan.” Das v. WMC Mortg. Corp., 831 F.Supp.2d 1147, 1156 (N.D. Cal. 2011) (citing King v. California, 784 F.2d 910, 913 (9th Cir. 1986)). Flores' deed of trust was signed in 2005. Under either timeframe, Flores' claims are irreparably time-barred. Also, Flores failed to allege any facts creating the “appropriate circumstances” under which the Court would equitably toll the statute of limitations until Flores discovered the alleged TILA violation. King, 784 F.2d at 915. As to the RESPA claim, Flores appears to claims violations of 12 U.S.C. § 2607, which prohibits kickbacks and unearned fees. Flores' sole statement in support of the RESPA claim is that “[d]efendants violated RESPA because the payments between the Defendants were misleading and designed to create a windfall.” Dkt. No. 1-1 at 28. This vague allegation falls short of stating a claim. In any event, this claim is also time-barred, as the relevant statute of limitations for RESPA violations is 1 year. 12 U.S.C. § 2614; Altman v. PNC Mortg., 850 F.Supp.2d 1057, 1074 (E.D. Cal. 2012). The claim for rescission derives from the other alleged legal violations in the complaint and also is subject to a three-year statute of limitations. Dkt. No. 1-1 at 28-29; Miguel v. Country Funding Corp., 309 F.3d 1161, 1164 (9th Cir. 2002). Thus, the TILA, RESPA, and rescission claims are DISMISSED WITH PREJUDICE.

         Second, as to Flores' fraud in the concealment and fraud in the inducement claims, they fail to state a claim, and after two opposition briefs and a hearing, Flores has not cured the deficiencies in his complaint. The elements of fraud are: “(a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” Hinesley v. Oakshade Town Ctr., 135 Cal.App.4th 289, 294 (2005) (quoting Lazar v. Superior Court, 12 Cal.4th 631, 638 (1996)). Fraud in the inducement is a type of fraud, occurring “when the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable.” Hinesley, 135 Cal.App.4th at 294-95 (internal citations and quotation marks omitted). On the other hand, in addition to the above elements, fraud in the concealment requires defendant have been under a duty to disclose the concealed fact to the plaintiff. Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858, 868 (2008) (internal citations omitted). When pleading fraud in federal courts, “a party must state with particularity the ...

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