Marlon Staggs et al v. Mortgage Electronic Registration Systems Inc et al

Filing 67

MINUTES (IN CHAMBERS) ORDER TO SHOW CAUSE REGARDING TILA CLAIM by Judge Christina A. Snyder: In voluntarily dismissing their TILA claim against Citibank, plaintiffs do not state whether dismissal is based on Citibank's assertion that it cannot b e liable because it is not a loan servicerwhich is an incorrect statement of lawor based on some other reason. Accordingly, plaintiffs are ORDERED to SHOW CAUSE on or before 5/14/2012, the basis on which they filed a voluntary dismissal of the TILA claim as to Citibank. In light of this order, the hearing on defendants' motions to dismiss 21 , 26 , 29 , 31 , 37 , 45 , are hereby continued until 5/21/2012 at 10:00 AM before Judge Christina A. Snyder. Court Reporter: Laura Elias. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-1002 CAS (VBKx)

Title

MARLON STAGGS ET AL. v. MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC. ET AL.

Present: The Honorable

LAURA ELIAS
Court Reporter / Recorder

Attorneys Present for Plaintiffs:

I.

April 24, 2012

CHRISTINA A. SNYDER

CATHERINE JEANG
Deputy Clerk

Proceedings:

Date

N/A
Tape No.

Attorneys Present for Defendants:

(In Chambers:) ORDER TO SHOW CAUSE REGARDING
TILA CLAIM

INTRODUCTION

On February 6, 2012, plaintiffs Marlon and Christine Staggs filed suit against
Mortgage Electronic Registration Systems, Inc. (“MERS”); Recontrust Company, N.A.
(“Recontrust”); Countrywide Financial Corp. (“Countrywide Financial”); Countrywide
Home Loans, Inc. (“Countrywide”); Countrywide Home Loans Servicing, L.P. f/k/a BAC
Home Loan Servicing; Bank of America, N.A. (“Bank of America”); BAC Home Loans
Servicing L.P. (“BAC”); Eddie Avakian; LandSafe Apprisal Services Inc. (“LandSafe
Apprisal”); LandSafe, Inc. (“LandSafe”); Hearn Quality Assurance (“Hearn Quality”);
Mark Hearn; TC Appraisals; C. Bill Lee; Martel Lofts LLC (“Martel”); Omri Meron;
AMI Real Estate, Inc. (“AMI”); Citibank, N.A. (“Citibank”); Certificate Holders of Bear
Sterns Alt-A Trust 2006-7 as a separate unknown legal entity; Structured Asset Mortgage
Investments II, Inc. (“SAMI II”); Wells Fargo Bank, N.A. (“Wells Fargo”); and Does
1–10.
The complaint asserts thirteen claims for relief, styled as: (1) declaratory relief;
(2) unjust enrichment; (3) wrongful foreclosure; (4) tortious interference with contractual
relations; (5) promissory estoppel/constructive trust; (6) slander of title; (7) declaratory
relief/quiet title; (8) equitable estoppel; (9) violation of the Truth in Lending Act, 15
U.S.C. § 1641(f)(2) (“TILA”); (10) violation of Cal. Bus. & Prof. Code §§ 17200 et seq.
(“UCL”); (11) violation of Cal. Bus. & Prof. Code §§ 11300 et seq. (Unlawful
Appraisal); (12) injunctive relief; and (13) violation of the Real Estate Settlement
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-1002 CAS (VBKx)

Date

April 24, 2012

Title

MARLON STAGGS ET AL. v. MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC. ET AL.

Procedures Act, 12 U.S.C. § 2605 (“RESPA”).
On February 28, 2012 defendants MERS, Recontrust, Countrywide Financial,
Countrywide, Bank of America, LandSafe Appraisal, and LandSafe filed a motion to
dismiss the complaint. Defendants amended their motion on March 2, 2012, and Wells
Fargo, Citibank, Hearn Quality, and Mark Hearn joined in the motion. Plaintiffs filed
their opposition on March 13, 2012.
On March 22, 2012, the Court issued an order to show cause (“OSC”), directing
Citibank to respond to plaintiffs’ allegations that Citibank’s actions violated TILA, 15
U.S.C. § 1641(f)(2). Dkt. No. 50. Citibank filed its response on April 6, 2012, asserting,
inter alia, that plaintiffs’ TILA claim under § 1641(f)(2) claim fails because Citibank is
not a “loan servicer.” Dkt. No. 61 at 4.
On April 16, 2012, plaintiffs filed a reply to Citibank’s response to the Court’s
OSC. Dkt. No. 65. Their reply states, in pertinent part:
Plaintiff[s] hereby voluntarily dismiss[] the TILA claim as to Citibank. Plaintiffs
concede that the [c]omplaint, as written, does not support a claim against Citibank
for TILA [v]iolations. Given the complexity of the case, and the intertwined roles
of the defendants, [p]laintiffs request that Citibank be dismissed without prejudice
from [plaintiffs’] ninth cause of action for violations of 15 U.S.C. § 1641(f)(2).
Id. at 3 (alterations omitted).
It appears that plaintiffs are responding to Citibank’s assertion that it is not a loan
servicer and therefore not liable under § 1641(f)(2). However, “[b]ased on the language
of §§ 1640 and 1641, courts have held that ‘[w]hile it is the servicer of the loan that has
the obligation to provide the information to the borrower pursuant to section 1641(f),
liability for violations of TILA rests squarely and solely with the creditors.’” Selby v.
Bank of America, Inc., 2011 WL 902182, at *6 (S.D. Cal. Mar. 14, 2011) (quoting
Ording v. BAC Home Loans Serv., LP, 2011 WL 99016, at *3 (D. Mass. Jan. 10, 2011));
Banut v. BAC Home Loans Serv, LP, 2011 WL 5237751, at *2 (E.D. Cal. Oct. 28, 2011)
(rejecting argument that a loan servicer could be liable under TILA because “TILA
provides for civil liability on the part of any creditor who fails to comply with any
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-1002 CAS (VBKx)

Date

April 24, 2012

Title

MARLON STAGGS ET AL. v. MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC. ET AL.

requirement imposed by TILA”) (internal quotation marks and citation omitted);
Consumer Solutions REO, LLC v. Hillery, 2010 WL 144988, at *3 (N.D. Cal. Jan. 8,
2010) (“With respect to Saxon, a TILA damages claim predicated on a violation of
§ 1641(f)(2) cannot stand because TILA allows for a suit against a creditor” and not a
loan servicer); see also Horton v. Country Mortg. Servs., Inc., 2010 WL 55902, at *3
(N.D. Ill. Jan. 4, 2010) (“TILA expressly disclaims any liability for mere servicers unless
the servicer is or was the owner of the obligation.”) (internal quotation marks omitted);
Koons Buick Pontiac GMC, Inc. v. Nigh, 543 U.S. 50, 54 (2004) (noting that TILA
“prescribes civil liability for any creditor” who violates it); 15 U.S.C. § 1605(a) (“[A]ny
creditor who fails in connection with any consumer credit transaction to disclose to any
person any information required . . . is liable . . . .”).
In voluntarily dismissing their TILA claim against Citibank, plaintiffs do not state
whether dismissal is based on Citibank’s assertion that it cannot be liable because it is not
a loan servicer—which is an incorrect statement of law—or based on some other reason.
Accordingly, plaintiffs are ORDERED to SHOW CAUSE on or before May 14, 2012, the
basis on which they filed a voluntary dismissal of the TILA claim as to Citibank.
In light of this order, the hearing on defendants’ motions to dismiss is hereby
continued from April 30, 2012, until May 21, 2012 at 10:00 a.m.
IT IS SO ORDERED.
:
Initials of
Preparer

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IM

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